Answered by Shaykh Muhammad ibn Adam al-Kawthari
My question has two parts and I am seeking clarification about insurance (I have read previous questions) and items which are paid for in advance which may or may not eventuate. Please see below for explanation.
My first question relates to 3rd party property insurance (not to be confused with compulsory 3rd party insurance; see below for clarification) whereby the insurance company will pay damages to anyone whom you might have an accident with for a nominal fee each year.
In Australia there are basically two types of third party insurance.
1. 3rd Party Compulsory: This insurance covers you in the event of harming a person. e.g. you run over someone and the family sues you.
2. 3rd Party property: As the name suggests, this insurance covers you for any damage you cause to OTHER peoples property.
The second type is NOT compulsory.
For example, if I was driving and crashed into a $500,000 vehicle (exaggeration, but you get my point) the insurance company will fix/pay any damages to his car. In the event that I do NOT have the second type of insurance mentioned above I can/will be sued for damage I caused to his vehicle (in this example, lets say the car was a complete write off and I had to pay $500,000).
Now in the above scenario, I would most likely be taken to court by the owner for not paying him the $500,000 compensation for his wrecked vehicle. At court, the judge will most likely order me to pay $40/week for the rest of my life (depending on my income) as I have nowhere near $500,000.
This brings me to my dilemma.
Wouldn’t it be unIslamic to wrong the above person? How can I go about paying this man knowing that I will never repay him? How will I face this man on the day of judgement knowing that I am in debt to him?
My second question relates to the advance payment for a service which may or may not eventuate. For example, a motoring club to whom you pay a fee every year for road service, i.e. if you car breaks down you call and they will come and fix the problem. Now obviously the call rate each year will differ, some years you might call them 10 times where other years you do not call them at all. Does the above service fall into the category of “the item being sold is known” as mentioned in The Mejelle.
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, if one is required by law to take up an insurance cover, then it will be permissible to take the insurance up to the minimum that is legally required. Anything extra would not be permissible.
The third party property insurance (which is not compulsory) mentioned by you will also be impermissible, due to the reasons mentioned above.
As far as the damage caused to someone else’s property or car is concerned, contemporary scholars state that one will be responsible (dhamin) for the damage caused to others, thus the rules of Islamic law with regards to stipulated offences or felony (jinayah) will be applicable. The international Islamic Fiqh academy discussed this issue in its 8th annual meeting in 1993 in Brunei, and after much deliberations and discussions it concluded to the following:
“…Secondly, the rules of criminal offences or felony (jinayah) will apply in accidents resulting from the movement of vehicles, even if the majority of these accidents occur due to error and mistake. The driver (m: of the vehicle) will be responsible for the damage and harm caused to others, whether the damage is physical (m: to the body) or to the other person’s wealth and property, when its origin is determined of that which is a mistake and harmful. The perpetrator will not be excused except in the following circumstances:
a) If the accident is a result of some forcible and overpowering power which one is unable to avoid and it becomes impossible to keep away from it. And this is anything that occurs which is external from the interference of the human being (m: meaning any accident that occurs due to reasons that are unavoidable and not due to the direct action of the driver, such as excessive wind pushing the car into having an accident with another car, etc).
b) If the accident is caused by the one who is harmed, in that his action strongly influences the causation of the end result.
c) When the accident occurs due to the error of a third person or due to the offence of this third person. In such a case, he (the third person) will be held responsible.” (See: Qararat wa Tawsiyat Majma’ al-Fiqh al-Islami, p. 163)
Therefore, causing damage to another person’s body or property will result in one having to compensate for the damage caused. Only in certain situations will this compensation be waived.
As far as paying this compensation is concerned, it is surely something that must be paid to the one whose property was damaged. You state that in the case of excessive damage being caused, one will never be able to pay for the compensation, thus will be answerable on the Day of Judgment.
However, there are few things that need to be understood here:
Firstly, the extent of the damage that you have given as an example is very rare and almost non-existent. There may be situations where the compensation is very high, but not to the extent where it becomes impossible to pay in one’s lifetime.
Secondly, merely the fear of not being able to pay the full compensation will not legitimize something that is categorically unlawful such as insurance. Even if one was to take “the lesser of two evils” it would have to be taking the risk of causing damage rather than insurance, for the former is something that is probable whilst the latter is unlawful for certain. Thus, insurance will not become permissible on grounds that one may cause excessive damage to another person’s car and not be able to pay for the damages.
Thirdly, scholars mention that if one was to take out a loan (or had to pay someone due to some reason such as compensation) but died before being able to do so, and he had a firm intention of repaying the loan and also tried his best to pay it off, it is hoped that he will be excused by Allah Most High on the Day of Judgment.
Imam al-Bukhari (Allah have mercy on him) mentions under “The Chapter of Loans, Payment of loans, Freezing of property and Bankruptcy” a Hadith narrated by Sayyiduna Abu Hurayra (Allah be pleased with him) that the Messenger of Allah (Allah bless him & give him peace) said: “Whoever takes the wealth of the people with the intention of repaying it, Allah will repay it on his behalf, and whoever takes it in order to squander it, then Allah will destroy it.” (Sahih al-Bukhari, no. 2257)
The great Hadith master (hafidh), Imam Ibn Hajar al-Asqalani (Allah have mercy on him) states in the commentary of this very narration in his masterpiece Fath al-Bari:
“…The Hadith explains that Allah Most High will repay the debt on his behalf either by providing him with wealth in this world (dunya) or by taking care of the matter on his behalf in the hereafter.” (Fath al-Bari, 5/68)
It is stated in al-Fatawa al-Hindiyya:
“A man died leaving behind a debt that needed to be paid off, al-Natifi stated that we hope that he will not be answerable in the hereafter if he had an intention of repaying the debt. The same has been mentioned in Khazana al-Muftiyyin.” (al-Fatawa al-Hindiyya, 5/366, Bab fi al-Qardh wa al-Dayn)
Thus, if one was in debt in any way to another person and had a firm intention of repaying the debt and also tried his best to do so, then it is hoped from Allah Most High that either He will make it easy for the repayment of the debt in this world or take care of the matter in the hereafter by compensating to the creditor and forgiving the debtor.
In light of the above reasons, insurance will still remain impermissible and cannot be justified due to the fear of not being able to repay for the damages caused to another person’s property.
As far as your second question concerning “cover plan contracts” is concerned, this was answered in an earlier post. Search the archives on www.sunnipath.com
And Allah knows best.
Muhammad ibn Adam al-Kawthari