Ruling On Insurance

(Comprehensive & Third Party) Questioner: He asks concerning the ruling on third-party car insurance, where in the event of an accident (Allāh forbid) between the insured car and another vehicle, the insurance company compensates only the other party, covering any damages to the other driver, passengers, or their vehicle. Additionally, what is the ruling on comprehensive insurance, which covers compensation for both parties for damages to lives or property? Sheikh Ṣāliḥ Al-Fawzān ḥafidhahullāh: Commercial insurance of all types, including car insurance, life insurance, health insurance, merchandise insurance, and building insurance, which are intended for investment and profit, are strictly PROHIBITED. This prohibition is due to the presence of significant uncertainty, ambiguity, risk, and the unjust acquisition of people's money. The large sums payed out in compensation are not from the insurers' own pockets but are taken from the funds of the poor policyholders, which are then distributed to others unjustly. They take the money from a group and pay it out to others, and they also profit from the remaining amounts, thereby manipulating and wrongfully consuming people's money. They also cause others to consume it wrongfully. Therefore, it is incumbent upon a Muslim to place their trust in Allāh Almighty and rely on Him. If they incur any loss, they should bear the financial consequences themselves. As stated in the ḥadīth: ((لاَ يَجْنِي جَانٍ إِلاَّ عَلَى نَفْسِهِ)) "Indeed, no one commits a crime except against himself." This practice is not considered a form of cooperation, as some claim. Rather, it is a form of investment and unjustly profiting from people’s misfortunes, accidents, and disasters. The true intention behind it is manipulation and wrongful consumption of people's money, combined with risks, uncertainties, and ignorance, among other harms associated with various types of insurance. Questioner: So this includes third-party as well as comprehensive insurance covers? Sheikh: Yes, it encompasses all types of commercial insurance, which are intended for investment and profit for those involved (with the insurance firm). As for cooperative insurance, which is not truly referred to as insurance but rather تعاون cooperation, it involves donations made by a group of individuals. These donations are collected, and in the event that one member suffers a calamity or disaster, assistance is provided from this fund. There is no return of profits or financial benefits to the participants, and the purpose of this fund is solely to help those in need. This is the true form of cooperation, and it should not be called insurance but rather mutual assistance for the needy.