Question Summary:
What is the ruling on leasing or financing a new car that mandates full coverage insurance?

Question Detail:

I was considering buying a motor vehicle, which not only had an attractive price tag, but for the cherry-on-top could be leased or financed at 0.00% APR.However, when I called my insurance company to get a quote, they informed me that leased or financed vehicles, because they are not fully-owned, must have full-coverage car insurance (basic third-party liability insurance will not be accepted).  I cannot get around that requirement, and the Toyota dealership confirmed it.Does this mean that it is effectively haram to lease or finance new cars where such conditions exist?  My understanding is that since a car is a necessity of life, it is acceptable to partake in getting an insurance policy to the extent required by law.  However, having a *brand-new* car is NOT a necessity of life, therefore the full-coverage insurance policy is not justified.If I am making any incorrect assumptions in my understanding, please correct me.Or is there something else I don't know?

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Respected brother-in-Islam,
Your desire to adopt a halal course of action is encouraging. Adopting halal invokes the mercy of Allah Ta'ālā and barakah in your wealth.
Your understanding of conventional insurance schemes being prohibited is correct.[1] One will be excused of taking out insurance due to it being required by law.[2] In the enquired case, you may consider the following alternatives:
(1) In the case of leasing a vehicle, request the automobile dealer, if he is a non-Muslim, to take out the insurance policy under his name and adjust the payments for the insurance into the monthly installments for the car. This way, the car will be insured and the insurance will be under the name of the non-Muslim.
(2) In the case of buying the car, request the dealer to keep the car insured under his name for as long as the payments of the car have not been paid off. Once the car is paid off, you will not be able to keep the same insurance policy and will have to convert to a basic insurance policy as required by law.[3]
(2) Find a deal with 0% APR that does not force you to buy the full-coverage insurance. Remember, such deals have strict requirements, such as a high credit scores, good driving records, etc.
(3) Buy the car on cash to avoid loans and forced full-coverage insurance policies. As such, it would be best to look for low-end or used cars that can fit your budget. If you have another vehicle from beforehand, see what the trade-in value of the vehicle is so you can cut your costs and cover the rest with cash.
You should explain to the dealer that as Muslims we have to adhere to Sharī'ah laws in buying and selling and we are specifically averse to interest and insurance. Explain to him that we do not seek any financial concession in doing our transactions according to Islamic law. It is a matter of merely restructuring the deal to suit religious obligations. Advise him that if he can facilitate such a contract, he will attract many Muslim customers who are sensitive to Sharī'ah compliancy in their dealings.
And Allah Ta’āla Knows Best
Bilal Mohammad
Student, Darul Iftaa
USA 
Checked and Approved by,
Mufti Ebrahim Desai.
www.daruliftaa.net