Answered by: Mufti Syed Johir Miah
Assalamu Alaikum, is buying an extended warranty halal or haram? For example, I buy a vacuum and I get a 1-year manufacturer warranty. This happens by default. Then I decide to buy another 3-year warranty to cover me from accidents or general faults. Please see the link here which gives the option of buying the extended warranty https://www.argos.co.uk/product/8109817
In the name of Allah, the Most Gracious, the Most Merciful
At the time of purchasing an item, it is permissible to purchase an extended warranty for the future.
In this case, the fee for the warranty will be regarded to be part of the purchase price of the item.
However, it is not permissible to purchase an extended warranty after purchasing an item as the above interpretation would not be possible in this case, as purchasing a separate warranty will fall in the category of insurance. Additionally, there is a component of ambiguity (Gharar) in such a transaction. The item may require repairs in the future or it may not require repairs. If it does require repairs, the extent is unknown.
The Messenger (صلى الله عليه وسلم) of Allah (عز و جل) prohibited a transaction of Gharar.
Sayyiduna Abu Huraira ( رضى الله عنه ) said that
«نَهى رَسُولُ اللهِ ﷺ عَنْ بَيْعِ الحَصاةِ، وعَنْ بَيْعِ الغَرَرِ»
“Allah’s Messenger (صلى الله عليه وسلم) forbade a transaction determined by throwing stones, and the type which involves some uncertainty”. 1
The word Gharar literally means a risk. The grammatical derivation of the term Gharar refers to items with a likeable form and disliked reality. Gharar sales refer to the existence of Gharar either in the nature of the sale itself, or the sale is what qualifies as Gharar. For example, selling birds in the air or water in large volumes of water etc. Gharar lexically refers to deception, where a necessary condition for acceptability may not exist.
Deception (Gharar) may occur in a number of forms through undeliverability of the object of sale e.g. a runaway horse or camel, non-existence of the object or the lack of full ownership of the object by the seller e.g. fish in large volumes of water.
Uncertain transaction (بَيْعِ الغَرَرِ) is the type of transaction which is intended in which there is no guarantee that the seller can deliver the goods for which he receives payment. It could include such items as selling a runaway slave, fish that one has not caught, milk in an udder of a cow etc.
It can also be defined as ‘aleatory contracts of sale’, but this is not the only phrase to which that applies.
Extended warranties that have specific stipulations are permitted.
This is because they do not go against the principles of the Shariah, do not normally lead to dispute, and are customary market practice.
It is permitted to get extended warranties and service contracts such as the one mentioned, and these are not considered the same as insurance.
Only Allah knows best.
Written by Maulana Syed Johir Miah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
1 Sahih Muslim, Hadith Number 1513, 1153/3, Dar Ihyat Turath, Beirut, Lebanon, 1412 H.