Answered by Shaykh Muhammad ibn Adam al-Kawthari
I currently drive my mother’s car. The main insurance policy holder for the car is my Mum. My brother and I are second drivers. Recently my brother had an incident where he damaged another driver’s car. At the time we had “fully comprehensive” insurance. The driver wanted the damages that were done to his car paid for. With “fully comprehensive” insurance our insurance company will pay all of the expenses. In the time between the incident and the payout, the insurance policy expired. I explained to my family that only “third party only” car insurance was permissible in Islam. With “third party only” insurance, we will have to pay for the damage caused with our own money. My family was very reluctant to take “third party only” insurance as we are not financially strong at the moment. This was causing a lot of fitna in the household so I finally gave in and told them to renew the “fully comprehensive” insurance.
All forms of commercial insurance prevalent in modern trade are unlawful (haram) according to Shariah, for they have either an element of interest (riba) or chancing (qimar), both of which have been explicitly and sternly forbidden by Allah Most High in the Qur’an. This has been explained in detail in many earlier posts.
However, it should be remembered that if one is obliged by law to have an insurance cover for one’s car, then it would be permissible for one to have insurance up to the minimum level required by law. Since the third party insurance is mandatory by law in many countries, it would be permissible to take up this insurance, for it is impossible for one to avoid it.
Thus, what you explained to your family that only third party insurance is permissible according to Shariah was correct indeed. It is impermissible (in normal cases) to take up “fully comprehensive” insurance.
It would not be permissible to violate an injunction of Shariah merely on the fact that other family members will become upset. One should offer sincere advice in a gentle and polite manner without causing any unnecessary rift between family members. Your responsibility is to advice your family that fully comprehensive insurance is not permissible. However, if they don’t adhere to your advice, you must still keep good ties with them. You yourself must come out from this insurance cover policy. If you do that, your responsibility will be fulfilled.
If it is very difficult to come out from the insurance policy and your family are no way in a position to take heed of what you say, and that it is causing immense family disputes and problems, then it may be permissible to take up the fully comprehensive policy provided two conditions are met:
Firstly, you must only take avail of the total premium paid to the insurance company up to the time of the accident. The rest of the compensation offered by the insurance company must be given in charity (as is the general case with unlawfully acquired wealth),
Secondly, you must not hold both the third party cover and fully comprehensive cover simultaneously. One must suffice only on one policy, for only one is a legal requirement. It would not be permitted to have two separate policies, in that after taking the fully comprehensive cover one must not enter into a third party insurance.
And Allah knows best.