Question
I would like to know if insurance is permissible in islam.according to one brother he says the time we living in with all the crime around us it is permissible to insure our businesses & our homes. is this correct.jkz
Answer
In the name of Allah, Most Gracious, Most Merciful
Assalaamu `alaykum waRahmatullahi Wabarakatuh
Conventional insurance is designed to protect oneself against future losses in exchange of monthly premiums.
It is a well settled principle of Shari’ah that every transaction between two parties in which the payment by one party is certain and mandatory while payment by the other party depends upon a contingency (which may or may not occur) is included in qimar (gambling) and gharar (uncertainty) and is therefore unlawful.
(Ahsanul Fatawa 24/7 H M Saeed); (Jadeed Fiqhi Masa’il 432/1 Naemiyah);(Takreer Tirmizi 98/1 Meman Islamic Publishers);(Contemporary Fatawa 185 Idara Islamiya)
Conventional insurance schemes are impermissible because they have three prohibited elements in them: interest, gambling and uncertainty.
Interest in an insurance cover:
Take for example a person take out a insurance cover and pay a premium of R100 a month. If something happens to him in the second month, and the bill came to R10 000, the insurance company is obliged to pay the R9 900 excess on his behalf. He thus, paid only R100 and got a legal right of more than that amount. That is riba and interest. He is getting something in lieu of nothing. Interest is expressly prohibited consider the following;
“O you who believe, fear Allah and give up what still remains of riba, if you are believers. But if you do not (give it up), then listen to the declaration of war from Allah and His Messenger. However, if you repent, yours is your principal. Neither wrong, nor be wronged. If there is one in misery, then (the creditor should allow) deferment till (his) ease, and that you forgo it as alms is much better for you, if you really know. Be fearful of a day when you shall be returned to Allah, then every person shall be paid, in full, what he has earned, and they shall not be wronged.” (2:278 – 2:281)
Furthermore, Rasulullah صلى الله عليه و سلم mentions, “If a person consumes a single Dirham of Riba knowingly, it is considered more severe to Allah than thirty six acts of fornication.”
Rasulullah صلى الله عليه و سلم is also reported to have mentioned, “Even if Riba (apparently) increases, it will eventually lead to a decrease.”
There is gambling in an insurance aid cover:
Gambling in conventional Insurance:
For example, a person pays R100 premium a month, that is R12 00 per year. He may face loss in his home/business and benefit for a cover up of R50 000 or may even lose his premiums. That is qimaar (gambling). He stands to loose or gain.
Allah Ta’ala states in the Holy Quran, “They ask you about wine and gambling. Say, In both there is great sin, and some benefits for people. And their sin is greater than their benefit.” (2:219)
There is Gharar (uncertainty) in a conventional insurance aid cover:
A person’s premium is in lieu of an uncertain event of the future. If he face loss in his home/business, the company will pay and if he do not face a loss in his home and business, then they will not pay. This is Gharar (uncertainty). He don’t know if he will face a loss in his home/business or not and to what extent.
Rasulullah صلى الله عليه و سلم advised
“Rasulullah صلى الله عليه و سلم prohibited from dealing in a future uncertain event”. That is exactly how an insurance aid works.
(Muslim, v. 5 pg. 3, Dar al-Jeil & Dar al-Afaq Jadidah)
And Allah knows best
Wassalam
Ml. Safraz Mohammed,
Student Darul Iftaa
Checked and Approved by:
Mufti Ebrahim Desai
Darul Iftaa, Madrassah In’aamiyyah