Question Summary:
Property Insurance

Question Detail:

I need to insure my car, house, and household content. Please advise me who to go for a Shariah Compliant company.

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Property insurance is not permissible for the following reasons:
1. 1. Qimaar (gambling): The property Insurance Company might receive more than the insured monies or might not receive any amount of money. This is the same as gambling. If the insured person is afflicted with any loss or damage to insured properties worth millions, he might receive more than what he has paid for or might receive less. This is exactly how gambling works.
2. Riba (Interest): If the Insurance Company receives premiums worth more than the value of the insured property, then that will be usury and interest. If there is any loss to the insured person’s property and the loss is worth much lesser than the total premiums that he has paid to the insurance company, such a person would be guilty of undertaking a usurious and interest based transaction.
3. Gharar (Future Uncertainty): The obligation of payment from the side of the insurance company is based on a future contingency, i.e. obligation of payment. This is termed as Gharar in the Shari’ah. Rasullullah (Sallallahu Alayhi Sallam) prohibited any transaction which has the element of Gharar.
We are not aware of any Shariah Compliant insurance company. If you do come across any Shariah Compliant insurance company, you may forward their contracts to us for our review and analysis.
And Allah Ta’āla Knows Best                                       
Ismail Desai,
Student Darul Iftaa
Durban, South Africa
Checked and Approved by,
Mufti Ebrahim Desai.