A contagious disease is a subset category of infectious diseases (or communicable diseases), which are easily transmitted by physical contact (hence the name-origin) with the person suffering the disease, or by their secretions or objects touched by them.
The non-contagious category of infectious/communicable diseases usually require a special mode of transmission between hosts. These include need for intermediate vector species (mosquito that cause malaria) or transfer of bodily fluid (such as transfusions, needle-sharing or sexual contact).
The boundary between contagious and non-contagious infectious diseases is not perfectly drawn, as illustrated classically by tuberculosis, which is clearly transmissible from person to person, but was not classically considered a contagious disease. In the present day, most sexually transmitted diseases are considered contagious, but only some of them are subject to medical isolation.
Historical meaning 
Originally, the term referred to a contagion (derivative of contact) or disease transmissible only by direct physical contact. In the modern day, the term has sometimes been broadened to encompass any communicable or infectious disease. Often the word can only be understood in context, where it is used to emphasise very infectious, easily transmitted, or especially severe communicable disease.
Usually, epidemics are caused only by contagious diseases, but occasional exceptions occur, such as with black plague. This is because epidemics may also be regarded in terms of proportion of people infected with a transmissible disease.
Because of the nature of non-contagious communicable diseases, such as yellow fever or filariasis, their spread is little affected or not affected by medical isolation (for ill persons) or medical quarantine (for exposed persons). Thus, a "contagious disease" is sometimes defined in practical terms of whether isolation or quarantine make sense as a public health response.
- Merriam-Webster dictionary definition of contagious disease. Accessed Nov. 27, 2009
- http://www.encyclopedia.com/doc/1O62-contagiousdisease.html Definition from nursing encyclopedia.
-  A primer from the CDC on quarantine and its uses against contagious disease spread. Accessed Nov. 27, 2009.
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