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I've read fatwas about how insurance generally is haraam, however, if you live in countries where certain insurances are legally required, that type of insurance is not haraam. For example, car insurance is required in many countries.

My question is, if you are forced to get car insurance, and you end up in a genuine accident, i.e. not an accident you do or cause on purpose, is it okay Islamically to claim from the insurance you were forced to get in the first place?

Or, is it only okay to get forced insurance, but haraam to claim genuine claims on this forced insurance?

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When it is forced, IMO, it starts to resemble a fee more than gambling, similar to tax and tax returns. –  Muz Sep 29 '12 at 9:20
    
@Ahmadi Do you mean insurance is allowed in Islam? Brother I don't agree with that. This way you are depending on things beside/together Allah SWT. Allah SWT is enough for anything and everything and so I asked it. Now about obeyinng the laws of the land, one can only do that until it is not against Sharia'h. Jazakallah –  Atif Imran Sep 29 '12 at 10:16
    
it is like using remedies while believing cure is from Allah. Allah prefers to works be done by its tools and not by miracle. if you believe in some power for insurance in fact you have worshiped it and it is shirk. it should be seen as a tool and consider protection from God. –  Battle of Karbala Sep 29 '12 at 10:47

2 Answers 2

up vote 3 down vote accepted

Insofar as insurance is considered a form of either riba or gambling, proceeds therefrom should be treated as unlawful, as one would the proceeds from any such sources. Shaykh Muhammad ibn Adam al-Kawthari describes the Hanafi position on the matter thus:

The ruling on money gained from playing the lottery is similar to that of all other unlawfully acquired money, in that it should be given in charity to poor people without the intention of receiving reward

This is presuming that the ill-gotten gains cannot reasonably be returned to the rightful owners, which would be preferable.

When dealing with forced vehicle insurance (and to an extent, any form of insurance), there are a few extra considerations, which I will summarise thus:

  1. If you are not claiming more money than you have already contributed to your insurance company, then it can be argued that you are not profiting from gambling, rather you are merely recovering your own money which you were forced to pay out. In this case, the opinions of Shuyukh Muhammad Salih al-Munajid and Muhammad ibn Adam al-Kawthari is that there is nothing wrong with accepting the money.

  2. Any claim amount exceeding the amounts already paid as premiums would be considered unlawful and should be disposed of as mentioned above (e.g. donated to charity). However, my own personal opinion is that any exceeds can be kept aside for paying off future insurance premiums to the same company, as this would be a reasonable method of returning the money to its rightful owners. If circumstances change such that you are no longer paying these insurance premiums, any remaining exceeds can then be disposed of accordingly.

  3. However, there may be situations where the other party is clearly at fault, and the claim is paid out by either the offending party or his own insurance company. In this case, the opinion of Mufti Taqi Usmani is that you are entitled to be reimbursed for the damages in full, regardless of whether the money comes directly from the other party (preferable) or from his insurance company. This is completely independent of how much you may (or may not) have contributed to your own insurance company.

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+1 great answer mashaAllah. –  Ansari Dec 20 '12 at 16:15

The question needs clarification from multiple angles.

First, let us know that insurance as it is used in today's context is something that never existed during the time of our noble prophet (s) and the best generations after it. So you'll not be able to find a direct context that relates to the qur'aan or hadeeth.

Next, we see what insurance is... In the modern context, insurance is where you pay a regular fee (usually monthly) known as a premium. Then if something goes wrong, like an accident, you are compensated with an amount which may be BIGGER or SMALLER than what you have paid as premium.

Well, that's the standard case. But there are a lot more strings to it. For example, if you don't claim, there's the bonus, then there's a discount in the premium, then there's an additional insurance and so on... These extras vary from country to country and company to company.

Now, what do the scholars of sunnah say about this? In general, all scholars of the sunnah have warned against insurance. What are the reasons for saying no to insurance? Here are some...

  1. First, scholars state that this is like a gamble. You are challenging the insurance company that you're going to make money out of the deal and they do the same.
  2. There is deceipt. People making false claims and a lot of cooked up stories.
  3. There is gharar and uncertainty.
  4. Riba. You claim more than what you pay.

So insurance in general is considered haraam. But now comes the situation of third-party vehicle insurance. In many countries, one is compelled to make this payment whether or not you are going to make a claim. So it is more like a requirement in order to use your car on the streets. Without it you cannot drive.

Thus comes the deciding factor. Do you need to drive a car or can you do without it? This is something between you and Allaah. Another person can't answer that question for you. IF you are forced to drive a car for basic needs and you cannot do without insurance as compulsion, scholars say that there's no harm in it. But you cannot go for full-insurance and you cannot make any claims.

This is s very broad subject and you can find a lot of cases here: http://www.islam-qa.com/en/cat/316

And Allaah knows best.

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