Allstate tries to fix public relations blunder

Allstate (ALL) has removed a picture of a New York home from an ad touting its response to Superstorm Sandy because the property owners are fuming over how the insurer handled their claim.

Sheila and Dominic Traina were offered $100,000 by Allstate to pay for damage their Staten Island, N.Y., home sustained from the October storm, according to the New York Post. That's a fraction of what the home is worth.

According to Trulia.com, the average price for homes in Staten Island sold between September and November 2012 ranged from $238,730 and $825,020. Seeing their home in the Allstate ad upset the Trainas, the Post says. "I got disgusted,” Dominic Traina is quoted by the Post as saying. Allstate, which called its ad "1,000 Thank Yous," is trying to make amends to the couple.

"The advertisement in question showed general images of the destruction caused by Sandy including a partial image of the Trainas' home," writes Linda Strykowski, a company spokeswoman, in an email. "It does not reference them as customers or in any way imply they are satisfied with the status of their claim. We regret any concern this advertisement may have caused the Trainas and images of their home will not be included in Allstate's advertising."

A phone number listed for the Trainas was out of service. Sadly, the problem that the Trainas is experiencing is a common one. Policyholders and insurance companies are often at odds over what is wind damage and what is flood damage. Traditional homeowner insurance covers damage caused by wind but not flooding. People who are vulnerable to flooding are required to buy separate flood insurance, coverage which the Trainas decided to drop before Sandy struck, according to the Chicago Tribune. 

President Obama recently signed a bill to pay for $9.7 billion in flood insurance claims related to Sandy. Insurance losses related to the storm are expected to top $20 billion. In a separate matter, flood insurance rates may rise as much as 20% in a given year, twice as high as was previously allowed, because last year's passage of the Biggert-Waters Flood Insurance Reform Act of 2012.

--Jonathan Berr does not own shares of the listed stocks.  Follow him on Twitter @jdberr.

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