Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh.  (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Is car insurance haram or halal. Can you breifly explain me. (Reason for buying a car is: it is convenient and can save lot of time)

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Car insurance

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Beloved brother in Islam, it is not the concept of insurance per se which is illegal or prohibited in Islam, but rather what is ‘haraam’ and forbidden in Islam is the ‘interest-based’ aspect which is utilized by the conventional insurance companies during their transactions when conducting the insurance policies.

Almost all the conventional insurance companies transact their business based on interest, and it is this interest aspect which is deemed absolutely haraam in Islam. But Alhamdolillah, today there are several Islamic Insurance Institutions which provide insurance cover on various aspects based on Shariah principles, and there is absolutely no harm in seeking insurance from such Shariah-compliant ‘interest-free’ institutions.

Thus in conclusion, we reiterate again, that it is the not the concept of insurance per se by itself which is forbidden in Islam, but it is the ‘riba’ or interest element which is utilized by the conventional insurance companies which is deemed unlawful in Shariah Law.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan