Question Summary:
Using money from PPI claims

Question Detail:

Assalamoalaykum is it halaal to use money from ppi claims??

Answer :

In the Name of Allaah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Payment protection insurance (PPI), also known as credit insurance, credit protection insurance, or loan repayment insurance, is an insurance product that enables consumers to ensure repayment of credit if the borrower dies, becomes ill or disabled, loses a job, or faces other circumstances that may prevent them from earning income to service the debt. It is not to be confused with income protection insurance, which is not specific to a debt but covers any income. PPI was widely sold by banks and other credit providers as an add-on to the loan or overdraft product[1].

In principle, entering into an insurance scheme is impermissible due to the haraam elements found therein[2]. If you have entered into one, then you are only entitled to the premium you have paid[3]. Any additional amount must be given away in charity[4].

And Allaah Ta’aala Knows Best

Muajul I. Chowdhury

Student, Darul Iftaa

New York, USA

Checked and Approved by,
Mufti Ebrahim Desai.

[1] https://www.fca.org.uk/ppi/ppi-explained

[2] You may refer to following link for further details. http://www.askimam.org/public/question_detail/39379

[3]  فتاوى عثماني (3/ 544)

[4]  حاشية ابن عابدين (رد المحتار) (6/ 385)

ويردونها على أربابها إن عرفوهم ، وإِلا تصدقوا بها لِأَن سبِيل الكسب الْخبيث التصدق إذا تعذر الرد على صاحبه

البحر الرائق شرح كنز الدقائق (8/ 229) 

وإلا يتصدقوا به؛ لأن سبيل الكسب الخبيث التصدق إذا تعذر الرد

تبيين الحقائق شرح كنز الدقائق (6/ 27) 

وإلا تصدقوا بها؛ لأن سبيل الكسب الخبيث التصدق إذا تعذر الرد على صاحبه.

احسن الفتاوى (7/ 16)

فتاوى محموديه (16/ 381)