When you hear about contraband in the news, the typical thoughtconcerns illicit drugs or weapons, a drug ring or cartel usingproceeds to fund terrorism or the like. But the definition ofcontraband is far more extensive and includes any itemswhich are illegal to import into a particular country, as well asthose used to commit a crime.

3 Classes of contraband

In its simplest form, contraband items are illicit goodsreferring to items that are imported or exported illegally, mostcommonly drugs, weapons, counterfeited items like cigarettes,software, music and videos. However some items consideredcontraband may surprise you, such as wild animal parts includingfeathers. Some states may allow certain items like fireworks ormarijuana, but in states where they are not legal these items wouldnot be covered by a policy.

When considering illicit items from the eyes of law enforcement,the first and most obvious type of contraband is called primafacie, which in short means “at face value.” Basically it isseeing something that is obviously illegal, like a bag ofcocaine—at its face value, it is contraband.

Similarly, the term “contraband per se” is used to refer toproperty that is in and of itself unlawful to possess, produce ortransport. Possession of such property is illegal, no matter how itis used. This can vary from state to state, with products likefireworks, or even marijuana with its varied state laws.

The third class of contraband is called 'derivative' – and hereit gets a bit fuzzier. Let's take an example from illicit drugs. Ina case where loose cocaine is found on top of a digital scale, thecocaine is prima facie contraband and the scale, normally perfectlylegal to own, has now become part of the crime and is thereforeconsidered derivative contraband.

If both of these items were seized by law enforcement, theywould both be labeled as contraband. However, if the perpetratorcan prove that the scale was used for other legal means such as ina kitchen to weigh food, he is entitled to its return. On theclaims side, if the scale is included under a homeowner policy,even though it is used for illegal purposes, the scale may becovered.

As the University of Albany's Center for Problem OrientingPolicing explains, because contraband is illegal to possess, no onecan assert a legal interest in it.

Cloudy issue on cosmetic contact lenses

Recent stories in the news point to the level of complexity andobscurity of what defines contraband. For example, the U.S.Immigration and Customs Enforcement office warned consumers not topurchase contact lenses from places like Halloween or noveltyshops, salons, beauty supply stores, or online if the entity didnot require a valid doctor's prescription.

Although many places illegally sell decorative contact lenses toconsumers without valid prescriptions for as little as $20, thesevendors are not authorized distributors of contact lenses, which bylaw require a prescription. While $20 represents a small amountrelative to a claim, because it was sold illegally, coverage wouldnot necessarily extend to it.

For adjusters, the take-away here is that products sold withoutproper authorization may be contraband and not covered by a policy.The best rule of thumb is to consult an expert on the iteminvolved.

Insurance carriers differ in terms of their own best practicesfor handling contraband items, and states can differ widely intheir laws governing the use and possession of items such asfireworks and marijuana.

To sort out the wide variety of goods considered illicit and thecomplexity associated with properly identifying legal from illegalobjects, Enservio will be presenting a short webinar “RecognizingContraband in Contents Claims” on Thursday, December 18th at 11:30am EDT with a Q&A session to follow. Attendees can register byclicking here.