Many scholars consider conventional insurance problematic because of excessive uncertainty (gharar), gambling-like features and interest-based investments. Takaful — cooperative Islamic insurance — is the preferred alternative. Where insurance is required by law, such as car insurance in the UK, most scholars permit it out of necessity.

Is Insurance Halal? Car, Home and Life Insurance

Also asked as: “Is insurance haram?” · “Is life insurance halal?” · “Is car insurance halal?”

The concerns

Gharar: you pay premiums without knowing what, if anything, you will receive.
Maysir: it can resemble a bet on whether something happens.
Riba: insurers invest premiums in interest-bearing assets.

Takaful

Takaful is a mutual system: members contribute to a shared fund that helps whoever suffers a loss, and the fund is invested in Shariah-compliant ways.

When insurance is compulsory

Scholars widely permit legally required insurance (car insurance, some business cover) based on necessity. Many also permit insurance required by a landlord or lender. Life insurance is the most debated; Islamic family takaful products exist in some countries.

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The concerns

Takaful

When insurance is compulsory

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