Question Summary:
Are you allowed to have insurance in Islamic financing?

Question Detail:

In Botswana there is a bank that offers Islamic finance. One of the conditions is that to be financed, one must have insurance. However there is no Shariah Compliant insurance in Botswana. How can this be resolved? 

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Brother-In-Islam,
The purpose of establishing an Islamic financing scheme is to stay away from all forms of forbidden or haram transactions such as gambling, interest, etc. It does not make sense to have Islamic Finance with conventional insurance which has in it interest, gambling and uncertainty, all of which are haram. Therefore, the condition of having conventional insurance to be financed by an Islamic Finance scheme is not Shari`ah Compliant.[1]
You may contact Mufti Abdur Rahman Sharif, the head of the Darul Iftaa, Botswana to advise you of a mechanism to overcome the difficulty.
 
And Allah Ta’āla Knows Best
AbdulMannan Nizami
Student Darul Iftaa
Chicago, USA
Checked and Approved by,
Mufti Ebrahim Desai.
www.daruliftaa.net