Car insurance is a type of insurance designed to provide financial protection against losses incurred as a result of owning and operating a vehicle.
It is usually purchased by the owner or driver of the car as it protects from damage to the vehicle, personal injury, and liability resulting from accidents.
But due to its financial nature, there is an ongoing debate about whether car insurance is haram (forbidden in Islam). You’re in the right place if you’re also confused about this issue.
In this article, we’ll answer is car insurance haram in Islam with proof and explore the different views on this topic.
Is Car Insurance Haram?
According to Islamic teachings, car insurance is haram, but if it is mandatory in your country, then getting insurance with certain conditions is halal.
Islamic scholars consider car insurance as a form of gambling or interest, which is haram and not permissible in Islam.
Allah has explicitly forbidden gambling and interest in the Quran in multiple verses.
But Islam also teaches us to follow the law of our respective countries, so if it is mandatory to have car insurance in your country, then it is permissible for you to get one. Well, after that, you can fulfill your obligation to the law but still avoid taking part in activities that are haram.
You can also learn is life insurance haram.
Conditions Of Car Insurance According To Islam
Several conditions must be met in order for car insurance to be halal. Here are some of them:
Even if it is mandatory in your country (E.g., In the USA, UK, and India), you try to get a third-party type of insurance that does not involve gambling or interest. With this, you only pay the damages caused to another car, which does not involve any gambling or interest.
You must also avoid getting a comprehensive policy that covers your car and involves gambling or interest.
The most important point is to avoid taking interest. For example, if you’ve paid a monthly or yearly payment for your car insurance for 2 years, and your car gets damaged by an accident, then you should ask for the full amount from the insurance company.
According to the policy, the insurance company will pay all the damages. But this involves interest, as you’ve only paid a partial, and now you’re getting the full amount.
So, in this case, you can take only the amount you have actually paid and not the full amount, no matter if the damage is more than what you paid.
With this, you can fulfill your obligation to the law of your respective country and also follow Islamic teachings.
If you earn through compounding, you must read is compound interest haram.
Why Car Insurance Is Haram
Car insurance is haram because it involves gambling or interest, which are both forbidden in Islam.
Gambling involves, in this case, as you are signing a contract with an insurance company and paying them a certain amount in exchange for protecting your car. This is only based on a ‘chance’, and the insurance company has no guarantee that you’ll actually need their services.
For example, if you’ve paid for car insurance only 2 times and get into an accident, you get the full amount with interest from the insurance company. And this way, the insurance company will lose more money than what you have paid.
Whereas, if you paid several times but never got into an accident, the insurance company will win here. So it is like a gamble for the insurance company and car owner.
In Quran, Allah said: “O you who believe! Intoxicants, gambling, and Al‑Ansaab and Al‑Azlaam are an abomination of Shaytaan’s handiwork. So avoid that in order that you may be successful” (Al-Maa’idah 5:90)
With this verse, Allah has forbidden gambling and interest (Al-Ansaab). So this is why Islamic scholars do not consider car insurance halal.
Pros And Cons Of Buying Car Insurance
Car insurance can provide protection from losses due to collision damage, theft, and natural disasters. It can also provide legal support if you are found at fault in an accident.
On the other hand, car insurance premiums can be expensive, and a person may not always get the coverage they need or expect.
What Is Car Insurance, And How Does It Work
Car insurance is a type of financial protection that helps cover the costs of an accident or other damage caused to your car. It also provides legal liability coverage for any property or injury damages resulting from an accident.
The amount you pay for car insurance depends on factors such as your car’s make and model, age, driving record, and location. Generally, the higher the risk you pose as a driver, the more expensive the premiums will be.
See also is student loan haram.
Q. Is monthly car insurance haram?
A. Car insurance is haram, no matter if it’s monthly or yearly. The key here is to avoid activities that involve gambling or interest. But if it is mandatory in your country, you can pay monthly and follow the conditions mentioned above to ensure that your car insurance is halal.
Q. Is comprehensive car insurance haram?
A. Comprehensive car insurance is haram because it involves gambling or interest, which are both forbidden in Islam. Even if it is mandatory in your country, try to get a third-party type of insurance.
Q. Is selling car insurance haram?
A. Selling car insurance is halal as you do not involve yourself in activities that involve gambling or interest. However, you must make sure to provide fair and honest deals for your customers without any cheating or deception.
Q. Is car insurance halal?
A. No, according to Islamic teachings, car insurance is haram. However, if it is mandatory in your country, then getting insurance with certain conditions may be halal. For example, some Islamic scholars permit the purchase of third party car insurance as long as it does not include any risk sharing principles such as profit and losses.
Car insurance is not haram for people living in countries where it is mandatory, such as the United States, United Kingdom, and India. However, you must make sure to avoid policies that involve gambling or interest.
Try to get third-party insurance that only covers the damages caused to another car, not your car. And if you do get comprehensive insurance, ensure you are only taking the exact amount you’ve paid instead of full coverage from the insurance company.
This way, you can fulfill your obligation to the law of your respective country and also follow Islamic teachings.
I hope all your doubts and query is car insurance haram is now clear. If you still have any other queries, feel free to reach out for more information and guidance.
May Allah (S.W.T) help us make the right decisions and keep us safe from forbidden activities. Ameen!