Can they take the diyah (blood money) for the deceased loved one from the insurance company?
Commercial insurance is a forbidden kind of contract, and it is haraam in all forms. It is not permissible for anyone to participate in it unless he is forced to do so. We have explained the ruling on this in the answer to question no. 8889 and 39474.
The fact that it is haraam to participate in insurance does not mean that it is haraam to take one's rights from the insurance company if it is required to pay to someone who has been affected by an accident.
Based on this, there is no reason why one should not take the diyah for one who has been killed by accident or injured in an accident from whatever entity the those who are entitled to it have been referred, whether by the killer or the court, whether it is an insurance company or otherwise, because those who are entitled to the diyah are people who have a right, and they are not responsible for the other party’s dealings with the insurance company.
We asked Shaykh Ibn Jibreen about taking compensation from the insurance company and he replied: That is permissible, because these companies are committed to bearing costs incurred by the one who is insured with them, and there is no reason to refrain from doing that so long as they are obliged to pay compensation. All that the one who caused the accident has to do – in the case of a death – is offer the expiation for accidental killing, if the accident was caused by a mistake on his part.
And Allaah knows best.
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