A girl who allegedly had a gun pointed just inches from her chest by police as a three-year-old will be paid out $2.5million for psychological damage.

Davianna Simmons lived with her mother and grandparents when their home was raided by police on August 29, 2013.

According to court documents seen by DailyMail.com, the toddler had a loaded gun pointed at her chest during the raid, as another officer held a gun at her grandmother's head, and a third officer shook and pushed her handcuffed mother into a wall.

When Davianna's grandmother cried out for the police officer to take their gun off the child, the family alleges she was told to 'shut up', and the gun was not moved. Despite further pleas through screams and sobs, the family say the gun was not moved.

The child, who was previously outgoing and 'happy-go-lucky', began to suffer crippling nightmares after the event. Testimony filed on behalf of her family claimed Davianna 'springs up in the middle of the night and looks around, crying and screaming, “the police are coming, the police are here!” or “they’re here".'

Davianna Simmons (pictured) was just three years old when police raided her home and allegedly held a loaded gun at her and another officer held a gun at her grandmother's head

Police had obtained a warrant for the house and a man named Alonzo McFadden. According to the complaint filed by the Simmons family, the warrant was issued under the premise McFadden lived at their home, which he did not.

Police were raiding her home looking for a man associated with her mother, Aretha (right) and she was allegedly aggressively arrested, though she was acquitted of all charges

On the day, McFadden was arrested outside the home and convicted of drugs and weapons charges - but no drugs or were found inside the house, nor were any illegally kept weapons.

The complaint, which also sought financial compensation for damages to the home made during the raid, was filed in November 2014.

The family alleged police 'destroyed the front and back doors to gain entry to plaintiffs’ home, instead of knocking and announcing [their presence]'.

'They broke tables, chairs, dressers, a headboard and box spring mattress, candle holders, and a flat screen TV,' the 2014 complaint continued.

'Finally, they converted jewelry from Mrs. Emily Simmons, including a bracelet, three rings, and a gold chain. They converted $400 cash from Mrs. Simmons and $300 cash from Ms. Aretha Simmons. They confiscated and have not returned Mr. Simmons’ lawfully owned and registered firearms.'

In the complaint, it is alleged Davianna's mother, Ms Aretha Simmons, sustained an eye injury from the aggressive manner in which she was allegedly arrested, despite claiming she did not resist at any point.

Ms Simmons faced a bench trial on August 14, 2014, nearly a year after her arrest, and was acquitted of all charges.

Following the dramatic raid, Davianna was diagnosed with 'one of the worst cases of child Post Traumatic Stress Disorder' pediatric psychiatrist Dr Niranjan Karnik had ever seen.

A complaint filed in court by the family claims the young girl suffered nightmares where she would wake up screaming 'the police are here' and became frightened of law enforcement. Her family says before the raid, she was a 'happy-go-lucky' girl

A statement from attorney Al Hofeld, Jr, who represented the Simmons family, says Davianna, who is now eight, is still traumatized.

Hofeld, who is continuing to take on cases of children traumatized by police officers in Chicago, says it is an issue that requires more attention.

“Thankfully, we now have heightened national visibility and outrage focusing on police fatally shooting young African-American men,' he said.

'What we are still not hearing are the stories of thousands of children routinely being terrorized by police, like the Chicago Police officers who held a gun to the chest of 3-year-old Davianna Simmons.

'Between 2012 and 2015, roughly 1 out of 10 lawsuits the City settled involved someone younger than 18. This has got to stop. And I will continue to file these cases on behalf of young children of color until CPD makes it a priority to protect them. Right now, it is not even on CPD’s radar.'

The lawsuit was settled on February 20, 2018 - just hours before the case was set to go to trial.

Just weeks earlier, thousands of pages of documents were surrendered by the city, which led to further allegations some officers involved in the case had committed perjury.