Is it permissible to take out home insurance for the building only?

In the name of Allah, Most Gracious, Most Merciful

Assalaamu `alaykum waRahmatullahi Wabarakatuh

All insurance policies are not permissible because they have three prohibited elements in it: interest, gambling and uncertainty.

There is interest in insurance policies:

Take for example I take out a insurance and pay a premium of R100 a month. If something happens to me in the second month, and the bill came to R10 000, the insurance company is obliged to pay the R9 900 excess on my behalf. I paid only R100 and get a legal right of more than that amount. That is riba and interest. You are getting something in lieu of nothing.

Allah Ta’ala mentions:

“O you who believe, fear Allah and give up what still remains of riba, if you are believers. But if you do not (give it up), then listen to the declaration of war from Allah and His Messenger. However, if you repent, yours is your principal. Neither wrong, nor be wronged. If there is one in misery, then (the creditor should allow) deferment till (his) ease, and that you forgo it as alms is much better for you, if you really know. Be fearful of a day when you shall be returned to Allah, then every person shall be paid, in full, what he has earned, and they shall not be wronged.” (2:278 – 2:281)

There is gambling in insurance:

For example, I pay R100 premium a month, that is R1 200 per year. I may suffer a loss and benefit for a cover up of R50 000 or may even lose my premiums. That is qimaar (gambling). You stand to loose or gain.

Allah Ta’ala states in the Holy Quran, “They ask you about wine and gambling. Say, In both there is great sin, and some benefits for people. And their sin is greater than their benffit.” (2:219)

There is Garar (uncertainty) in insurance:

Likewise, my premiums are in lieu of an uncertain event of the future. If I suffer a loss, the company will pay and if I don’t, then they won’t pay. This is gharar (uncertainty). I don’t know if I will get sick or not and to what extent.

And Allah knows best

Wassalam

Ml. Ishaq E. Moosa,
Student Darul Iftaa

Checked and Approved by:

Mufti Ebrahim Desai
Darul Iftaa