I wish to start a rental business but there is a huge possibility of damage being done to the property. This will usually result in thousands of pounds of damage. There is a 30% chance of this happening and this figure is from my wife who deals with tenants every day (for work).
So, in this situation, if the business was to go ahead without insurance and some sort of damage occurred, it would be a massive loss. There is a high chance of that happening too.
So given this situation, would business insurance be permissible to account for something which has a very high chance of happening?
I appreciate the help, Jazakallah.
بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم
In the name of Allah, the Most Gracious, the Most Merciful.
Firstly, one must understand that Allah Ta’ala has not placed the solutions to our problems outside of the shari’ah. We may assume something is beneficial for us, but in reality, it is not. Likewise is the example of insurance. Whatever our situations maybe, if we use insurance, at the end of the day, the essence and impermissibility of insurance is still there and hasn’t changed.
The first aspect that renders conventional insurance as impermissible is due to the element of uncertainty (gharar). There is an uncertainty whether the insured will get the compensation promised to him, the amount of compensation, the time etc. Shari’ah demands that these aspects need to be settled before the contract is signed in order to remove future disputes, but in this particular contract, these areas are left ambiguous. It also contains the element of gambling (maisir) and interest as the money that the insured pays to the insurer become a part of his profit irrespective of whether or not the insured has suffered a loss or not. Islam recognizes this as ‘devouring people’s wealth unjustly’.
With regards to your question, your situation does not seem very demanding since the percentage of loss does not even reach half. Also, irrespective of the percentage, there is always a chance that the loss will not occur and hence the impermissible of paying premiums will remain and will not be uplifted. The ruling may have changed if you were in a dire position that would result in you losing your life or becoming homeless. Instead of conventional insurance, I would recommend you to look into the ‘Takaful System’. What’s better about the Takaful System is, you will be able to share your risk, and at the same time, you won’t be paying premiums and wasting a lot of your wealth.
Only Allah knows best
Written by Alimah Sabrina al-Faarsiyyah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham