Question Summary:
Is it Permissible to use the Insurance Payout?

Question Detail:

As SalamuAlaykum,
My farther has taken out insurance on my car which is not compulsory It covered my car incase of an accident , I recently had such an accident and am want to know if it is permissable to use the insurance payout

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Apart from any insurance (third party) which is a legal requirement, it is not permissible to take out any car insurance policy. These schemes contain elements of interest [Riba], gambling [Qimar] and deception [Gharar].
If you are paid out, you may only use the sum of your premiums and not more than that.[i] The excess amount should be disposed in charity without the intention of reward.[ii]
And Allah Ta’āla Knows Best
Imran Patel
Student Darul Iftaa
Zambia
 
Checked and Approved by,
Mufti Ebrahim Desai.