"Is car insurance permissible? The photo-copy of an article
published in "Arab News" is enclosed wherein it is held that
car insurance is perfectly permissible and it is not against
the concept of "Tawakkul" or "Taqdeer". Please explain whether
or not this viewpoint is correct in Shari'ah." (Mansoor
I have gone through the enclosed article, and I am sorry to
say that the viewpoint mentioned therein does not reflect
the correct position of insurance according to the
principles of Shari'ah as recognized by the overwhelming
majority of the contemporary jurists.
In fact, all
forms of the commercial Insurance prevalent in the
traditional Insurance companies are against the Islamic
principles because they have either an element of riba or
the element of qimar or gharar.
cause of the impermissibility of the current methods of
insurance is not that the insurance is against the concept
of tawakul or taqdeer, it is rightly mentioned in the
article of "Arab News" that taking a precautionary measure
against a possible loss or seeking a safe-guard against an
accident does in no way contravene the concept of "Tawakkul"
(placing one's trust in Allah) and of "Taqdeer" (Allah's
will and destiny).
like any other act in this life, every measure of precaution
must conform to the principles of Shari'ah and should not in
any manner cross the limits prescribed by the Holy Qur'an
It is a well
settled principle of Shari'ah that every transaction between
two parties in which the payment by one party to the other
is certain and mandatory while payment by the other party
depends upon a contingency (which may or may not occur) is
included in qimar and gharar and is, therefore, unlawful.
insurance of cars or other goods with the traditional
Insurance Companies is a commercial transaction in which the
person who wants to insure his goods is bound to pay a
premium to the company in accordance with the prescribed
conditions. This payment is certain and mandatory without
which an insurance is not possible. But on the other hand,
the payment by the company is not certain. It is contingent
upon an event or accident which may or may not occur. If the
accident takes place, the company is bound to pay an amount
far more higher than the amount of the premium paid by the
insured, but if the accident does not take place, the
company does not pay to him anything and the premium paid by
him goes without any return. In other words, the insured is
bound to pay in any case while the company may or may not
pay. Such kind of transaction is termed as gharar and Qimar
and is strictly prohibited in Shari'ah.
the accident takes place, the amount of insurance is paid to
the insured as a consideration of the amount of premium. It
is again repugnant to the well-settled principle of Shari'ah
that where money is exchanged for money, both the amounts
should be equal in quantity. Any increase on either side is
'riba' which is clearly prohibited by the Holy Qur'an and
It is for
these reasons that all the prevalent forms of commercial
insurance have been held by the majority of the contemporary
Muslim jurists as prohibited. This subject has been
thoroughly discussed in different international seminars and
conferences. Lastly, the question was also put before the
Second Annual Session of the Islamic Fiqh Academy
(established by the OIC) in Jeddah where all the Muslim
countries were represented through their eminent scholars.
After a detailed discussion of the subject, the Academy has
adopted the unanimous resolution that the prevailing forms
of insurance are prohibited in Shari'ah. However, the Muslim
countries can develop their own system of insurance through
the concept of takaful, waqf etc.
should be remembered that since third party insurance is a
mandatory legal requirement for every car-owner, he can
effect this kind of insurance, because it is not possible
for him to avoid it.