Answered by Shaykh Yusuf Badat
Question:
Someone wants to move to a new apartment, but the landlord makes it a requirement that you have liability insurance, is it allowed to apply for liability insurance in such a case?
Answer:
بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم
In the name of Allāh, Most Gracious, Most Merciful.
Jazāk Allāh Khayr/ Thank you for contacting Mathabah Institute.
Kindly note that in general, most insurance models entail ribā (usury). The Qur’ān has forbidden ribā. Therefore, in general, any ribā based transaction will remain forbidden.
Regarding liability insurance, if a monthly premium is paid, and in return, a cash payout is given, it is islamicaly forbidden as this is ribā due to the payout either being more or less than the actual amount of the total premiums paid. – (See: Qur’ān 2:275, Al-Ta’rīfāt Al-Fiqhīyyah, Page 102, Dār Al-Kutub Al-‘Ilmiyyah)
If, however the insurance company takes on the responsibility to provide the actual repairs to any damages, in return of the premiums, then this is permissible. This is similar to hiring a wet-nurse to breastfeed an infant. The parent or guardian pays a set amount, usually on a monthly basis, to the wet-nurse even though the timings or specific sessions to breastfeed are ambiguous. This ambiguity does not lead to dispute. This type of transaction in fiqh terminology is deemed as ‘aqd-al-ḍamān, ijārah or tabarru’ bi al-‘iwaḍ. – (See: Al-Fatāwā Al-Hindīyyah Vol 4, Page 411, Dār Al-Fikr, Fatawā Dār Al-‘Ulūm Zakarīyya, Vol 5, Page 438, South Africa)
Only Allāh knows best
وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا – البقرة ٢٧٥
الرِّبَا هُوَ فِي اللُغة الزِيَادَة وَفِي الشَرْعِ هوَ فَضلٌ خَالٍ عَنْ عِوَضٍ بِمِعْيارٍ شَرْعِيٍ مَشروْطٍ لِأَحَدِ المْتَعَاقِدَيْنِ فِي المْعَاوَضَة – كِتاب التعريفات الفقهِية ج ١٠٢ دار الكتب العلمية
وَأَمَّا شَرَائِطُ الصِّحَّةِ فَمِنْهَا رِضَا الْمُتَعَاقِدِينَ وَمِنْهَا أَنْ يَكُونَ الْمَعْقُودُ عَلَيْهِ وَهُوَ الْمَنْفَعَةُ مَعْلُومًا عِلْمًا يَمْنَعُ الْمُنَازَعَةَ فَإِنْ كَانَ مَجْهُولًا جَهَالَةً مُفْضِيَةً إلَى الْمُنَازَعَةِ يَمْنَعُ صِحَّةَ الْعَقْدِ وَإِلَّا فَلَا – كتاب الفتاوى الهندية ج ٤/ ص ٤١١ دار الفكر