Are Conventional Insurances Really Impermissible?

Answered according to Hanafi Fiqh by

Answered by Ustadh Salman Younas

Question: As far as I know, conventional insurances are impermissible and hence common things like home, life, car, medical, and travel insurance are all impermissible. But Shaykh Mustafa Zarqaa states that all insurance is halal.

Are conventional insurances really impermissible?

Answer: assalamu `alaykum

The default legal ruling of conventional insurance is that it is impermissible due to its incorporating elements of interest and chance, both of which are prohibited in the Qur’an.

There are, however, two exceptions to the above rule:

(a) In cases where the law of the land makes it a requirement to have insurance in order to use a certain commodity, such as a car, and
(b) In cases where there would be clear and overwhelming hardship in not having insurance, such as medical insurance in America.

In both the above cases, it would be permitted to take out insurance to fulfill the legal requirement and to the extent required to lift any potential hardship arising as a result of not being insured. Anything beyond these limits would remain on the basic rule of impermissibility. This is the opinion held by scholars such as Mufti Saeed Palanpuri, Shaykh Ali Qurra Daghi, and others.

Here, you should note that the types of insurance that may become permissible as a result of the two considerations above will likely differ from region to region. Thus, while medical insurance is a necessity in America, it is not the same case in Britain.

Finally, it is true that Shaykh Mustafa Zarqa allowed conventional forms of insurance. As a leading scholar of his generation, we respect his right to formulate legal opinions, but we are unable to present it as a followable position in light of the fact that the vast majority of scholars clearly rejected such an opinion on principled grounds.


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