Question Summary:
is it permissible to take out home insurance for the building only? not the contents?insurance for the building against natural disasters such as earthquakes etc?

Question Detail:

is it permissible to take out home insurance for the building only? not the contents?insurance for the building against natural disasters such as earthquakes etc?

Answer :

In the name of Allah, Most Gracious, Most Merciful
Assalaamu `alaykum waRahmatullahi Wabarakatuh
All insurance policies are not permissible because they have three prohibited elements in it: interest, gambling and uncertainty.
There is interest in insurance policies:
Take for example I take out a insurance and pay a premium of R100 a month. If something happens to me in the second month, and the bill came to R10 000, the insurance company is obliged to pay the R9 900 excess on my behalf. I paid only R100 and get a legal right of more than that amount. That is riba and interest. You are getting something in lieu of nothing.
Allah Ta’ala mentions:
 
أَيُّهَا الَّذِينَ آَمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِنْ كُنْتُمْ مُؤْمِنِينَ () فَإِنْ لَمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِنَ اللَّهِ وَرَسُولِهِ وَإِنْ تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ () وَإِنْ كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَى مَيْسَرَةٍ وَأَنْ تَصَدَّقُوا خَيْرٌ لَكُمْ إِنْ كُنْتُمْ تَعْلَمُونَ () وَاتَّقُوا يَوْمًا تُرْجَعُونَ فِيهِ إِلَى اللَّهِ ثُمَّ تُوَفَّى كُلُّ نَفْسٍ مَا كَسَبَتْ وَهُمْ لَا يُظْلَمُونَ
 
“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)
There is gambling in insurance:
For example, I pay R100 premium a month, that is R1 200 per year. I may suffer a loss and benefit for a cover up of R50 000 or may even lose my premiums. That is qimaar (gambling). You stand to loose or gain.
 
يَسْأَلُونَكَ عَنِ الْخَمْرِ وَالْمَيْسِرِ قُلْ فِيهِمَا إِثْمٌ كَبِيرٌ وَمَنَافِعُ لِلنَّاسِ وَإِثْمُهُمَا أَكْبَرُ مِنْ نَفْعِهِمَا
 
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 benffit.” (2:219)
There is Garar (uncertainty) in insurance:
Likewise, my premiums are in lieu of an uncertain event of the future. If I suffer a loss, the company will pay and if I don’t, then they won’t pay. This is gharar (uncertainty). I don’t know if I will get sick or not and to what extent.
And Allah knows best
Wassalam
Ml. Ishaq E. Moosa,
Student Darul Iftaa
Checked and Approved by:
Mufti Ebrahim Desai
Darul Iftaa, Madrassah In'aamiyyah