Returning from a Caribbean cruise, I tucked two bottles of rare Cuban Rum and a box of Habano cigars into my checked luggage. At the airport, Customs (CBP) flagged my bag. They confiscated the rum and the cigars. I was furious, but I thought, “At least my travel insurance covers lost luggage.” I filed a claim. It was denied in 15 minutes.
Key Takeaways
- The “Government Action” Exclusion: Every property and travel insurance policy has this clause. It explicitly excludes coverage for “seizure, confiscation, or destruction by order of any government or public authority.”
- Illegal Contraband: You cannot insure illegal items. If the item is banned in the jurisdiction (like Cuban rum in the US, depending on current 2026 sanctions), it has no insurable value.
- Duty Unpaid: Even if the item is legal, if you failed to declare it and pay duty, the seizure is a penalty. Insurance does not cover penalties.
- No Appeal: Unlike a denied fire claim, there is no fighting a Government Action denial.
The “Why” (The Trap)
Insurance is designed to cover Fortuitous Events (accidents). Getting caught breaking the law or violating customs regulations is not an accident; it is a legal consequence.
The Exclusions Section of your policy will list “War,” “Nuclear Hazard,” and “Governmental Action” right next to each other.
The Investigation (I Read the Fine Print)
I checked three types of policies.
Travel Insurance (Allianz)
- Clause: “We will not pay for loss caused by… confiscation or requisition by Customs or other government authority.”
Homeowners Policy (Chubb)
- Clause: “We do not cover loss caused by the destruction, confiscation, or seizure by order of any government or public authority.”
Marine Cargo Insurance (Shipping)
- Clause: Even professional shipping insurance excludes “Customs Seizure” unless you buy specific “Rejection Insurance” (which is for commercial importers only).
Comparison Table
| Scenario | Covered? | Reason |
| TSA breaks the bottle | Yes (Usually) | Accidental Damage |
| Customs seizes the bottle | No | Government Action |
| Stolen from Baggage Claim | Yes | Theft |
| Bottle leaks in bag | No | Improper Packing |
Step-by-Step Action Plan
- Know the Limits: Before you buy, check the current import limits. In 2026, AI scanners at customs are incredibly precise. You won’t sneak it past them.
- Declare It: If you declare the alcohol and pay the duty, they might let you keep it (if legal). If you lie and get caught, they seize it.
- Don’t File the Claim: Seriously. Filing a claim for “Seized Contraband” flags you in the insurance database (CLUE report) as a high-risk client who engages in illegal activity. It’s not worth the risk for a $200 bottle.
- [IMAGE: Red ‘Denied’ stamp graphic overlaying a claim form]
FAQ
What if they seized it by mistake?
You have to fight the government, not your insurer. If you get the item back damaged, then you might have a claim, but it’s a long shot.
Does this apply to taxes?
Yes. If you ship wine across state lines and the state seizes it for unpaid taxes, insurance pays $0.