Question:Fatwa on insurance.

[g4orce1]

Sorry if this has been covered in a previous post.
My question is:

What is the Fatwa on this matter?
Case Scenario: I have a muslim brother who just had a car accident and because of the damage that occured as a result, the city council are going to charge him for the repairs.
the brother hasnt got the money to pay for these things and he may have to file for bankruptcy.
There are a few insurance policies available.
one of them is called third party comprehensive insurance. Which means whatever damage you have caused wether it be to another car or to their property or to roads(light poles,barriers etc), you are completely covered except for a premium that has to be paid.
i have always been of the opinion that insurance is haram but these days an accident could bring ones family to there knees and it could mean losing everything.
thanks for any help and info.Salamz

 

[yasmin623]

Assalaimualaikum,

Insurance is not haram provided the policy does not involve any haram financial management. It depends on the insurance policy itself actually. I am not sure in yr country. In my country, car accident insurance is halal because it involves only garthering of a pool of money where the person insured pay a small amount of money and will get paid from the same pool of money if something bad happens.

In other cases, such as life insurance policy or investment link policy, the insurance company will use the premium paid to do some investment and part of the profit will be paid to the person insured upon surrender or when the insurance`s term is due. Under this circumstance, it can be haram if the insurance company invests the money in a `haram` way. (eg. invest in the share of alcohol companies for example). In such cases, if we accept the money, it can be one kind of `subahat`.

Hope it is helpful for you.

 

[yasmin623]

Assalamualaikum...

As far as I know, Insurance involves garthering of a pool of money from the contributers and the contributers get paid from the same pool of money if something bad under the terms and condition of the policy happens to them. There is nothing haram in this. Car accident insurance if running in this way is halal actually.

However, some other insurance like life insurance or investment link policy, the insurance company actually using the premium paid to do investment and part of the profits obtained will be given back to the person insured when the insurance policy due or upon surendder. In that case, if the investment of the insurance company is haram (eg, invest in the share of alcohol companies), it can be a type of subhahat if we accept the money. It is haram then.

Have to really make sure the way of the financial management before setting up insurance policy.:shymuslima1: