Car accident insurance

Q 2: What is the ruling on insurance, such as cars, goods, workers and factories? Sometimes the person applies for insurance willingly. Other times they are forced to have insurance. For example a car dealer may stipulate that the customers must insure the new cars they purchase by installments. The same applies when a person sends goods from another country. (Part No. 15; Page No. 249) We would like to know whether there are lawful and unlawful types of insurance. Is insurance considered a type of Riba (usury/interest)?

A: The type of insurance mentioned in the question, known as commercial insurance, is unlawful because it involves Gharar sale (fraudulent transaction where details about the sold item are unknown or uncertain) and Jahalah sale (sale with lack of knowledge), which are not pardoned. It also involves gambling, unjustly taking people’s money and Riba, which are all proved to be Haram (prohibited) transactions according to religious evidence. In fact, commercial insurance does not include compulsory kinds, as mentioned by the questioner, where the purchaser is forced to insure the goods they buy from the seller. Commercial insurance is willingly applied for. The purchaser can buy the car without insuring it or purchase imported goods when they reach the port of arrival. This course of action is usually adopted by traders who seek to avoid unlawful transactions. May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.