Question Summary:
Is it a sin to purchase insurance from lenders other that Salaam insurance?, as they are providing a “halal” alternative.

Question Detail:

Assalamualaikum, Dear Shaikh

I need your help on an urgent topic that is driving me mad!!

My question is based on the assumption that car insurance is permissible in the UK, as it is required by law..

I just have two simple follow up questions.

Q1) Is it a sin to purchase insurance from lenders other that Salaam insurance?, as they are providing a "halal" alternative.

Salaam is an independent provider of insurance. They state "Salaam Halal insurance is the UK's first insurance provider dedicated to providing insurance tailored to meet the needs and beliefs of the British Muslim community. All of our products are designed in accordance with the underlying Shariah principle of Takaful, are approved by our committee of Shariah scholars:Sheikh Nizam Yaquby, Dr. Mohamed Ali Elgari & Mufti Abdul Kadir Barkatulla.

I also spoke to one of their advisors. This was the jist of the conversation:

He said that their system is based on the concet of takaful, which is a pooling system that has been going on for years. Everyone makes a contribution to a central pot. If i was to have an accident (Allah forbid), then everyone's contribution will be used to cover my losses. Therefore everyone shares the risk.

The advisor also warned me that other lenders may participate in riba, and unethical investments such as alcohol or pornography, but i dont know if this argument carries any wieght, as i do not know to what extent it is true.

Finally he also mentioned that salaam's underwriter is a group called Principal Insurance Company Ltd who provide the risk assesment, and determine the amount to be payed by a client. The advisor assures me that Salaam is an independent provider, and any insurance i take out will be them and not Principal Insurance Company Ltd. Im not sure how this affects the halal status of salaam insurance, but i did notice this in Salaams very small print

"Salaam Halal insurance and Salaam insurance are the trading names of Principle Marketing Services Limited (registered number 6203397). Insurance arranged by Salaam Halal insurance and Salaam insurance is underwritten by Principle Insurance Company Limited (registered number 6203350), and the contracts based on the Islamic principle of Takaful have been approved by the Shariah Supervisory Committee. Each company is authorised and regulated by the Financial Services Authority and is on the FSA register. The companies are incorporated in England and Wales with registered offices at 8 Duncannon Street, London WC2N 4JF. You can check the details of Principle Insurance Company Limited (FSA registered number 467853) and Principle Marketing Services Limited (FSA registered number 480153) on the Financial Services Authority website at www.fsa.gov.uk/register/."

Q2) If your answer to the first question is yes it is a sin. Then what if i simply could not afford the alternative being offered by salaam insurance, (They are very expensive when it comes to insuring young drivers. The advisor tells me this is due to the rating system of their underwriter Principal insurance Compnay Ltd) ,will it be permissible for me to purchase form other lenders then?

Finally, i just want to say that i have tried to search for an answer to this question using your search facility, and could not find any question that relates to mine (as this is very specific). If however you feel that this has been answered already, please provide the link for it, or at least inform me that you cannot answer my question ASAP, as this is quite urgent.

JazakAllah

Wasalam

Answer :

In the name of Allah, Most Gracious, Most Merciful

Assalaamu `alaykum waRahmatullahi Wabarakatuh
 
We have not studied the Takaful model of Salaam insurance. However, we find difficulty in accepting its Shari’ah compliancy, as its underwriting group is Principal Insurance Company Ltd.
And Allah knows best
Wassalamu Alaikum
Ml. Talha Desai,
Student Darul Iftaa
Checked and Approved by:
Mufti Ebrahim Desai
Darul Iftaa, Madrassah In'aamiyyah