Fatwa ID: 07003
Answered by: Muftiyah Habiba Akhtar
Question:
Are we allowed to lease a car from a dealer because from what I know they make you buy full coverage insurance whenever you lease and as well as they have a late penalty clause.
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
The concept of Car insurance holds a large element of Interest. This is in reference to both annual insurance and monthly insurance.
The topic of insurance consists of paying a sum of money in the beginning of a year with the security of receiving back money when involved in an accident.
As defined by Insurance Information Institute (From a quick Search):
“Auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy”. (1)
Hence, the contract is outlined as such:
The driver pays a premium for unknown future instances that may or may not occur.
Taking out insurances are haram (impermissible).
The reason for this is the involvement of Riba and gambling.
The topic of insurance consists of paying a sum of money at the beginning of a year or contract with the security of receiving back money when involved in an accident, when diagnosed with an illness or when robbed/vandalised.
Hence, the contract of an insurance based contract which is the nature of the transaction you are referring to with the tracker device is outlined as such:
The client pays a premium for unknown future instances that may or may not occur.
The transaction is like a gamble as you may benefit from the transaction or you may not depending on what happens through the year.
Regarding Gambling, this Hadith by Ibn Abbas (RA) mentions:
Ibn Abbas said:
The Quranic verse :”O ye who believe ,approach not prayer with minds befogged until you can understand all they say,” and the verse: “They ask thee concerning wine and gambling. Say: In them is great sin and some profit for men ,” were repeated by the verse in Surat al-Ma’idah: ”O ye who believe, intoxicants and gambling,(dedication) stones.
(Sunan Abu Dawood, 3672) (2)
Therefore, as insurance involves Riba and gambling, it is impermissible.
The gamble exists in the unknown outcome that is attached as a condition to the contract. Such sales are called Bay’ul Gharar and this has been prohibited. (3)
In the UK, the following is the law:
“In 1930, the UK Government introduced a law that required every person who used a vehicle on the road to have at least third-party personal injury insurance. Today, this law is defined by the Road Traffic Act 1988” (4)
Therefore, in response to your query, the deal with the comprehensive leasing insurance would be considered an interest based insurance transaction and this will be impermissible.
Only Allah knows best
Written by Muftiyah Habiba Akhtar
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
1)
(2)
عَنِ ابْنِ عَبَّاسٍ، قَالَ { يَا أَيُّهَا الَّذِينَ آمَنُوا لاَ تَقْرَبُوا الصَّلاَةَ وَأَنْتُمْ سُكَارَى } وَ { يَسْأَلُونَكَ عَنِ الْخَمْرِ وَالْمَيْسِرِ قُلْ فِيهِمَا إِثْمٌ كَبِيرٌ وَمَنَافِعُ لِلنَّاسِ } نَسَخَتْهُمَا الَّتِي فِي الْمَائِدَةِ { إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالأَنْصَابُ } الآيَةَ
(Sunan Abu Dawood, 3672)
(3)
نهي النبي – صلى الله عليه وسلم – عن بيع الغرر» والغرر ما يكون مستور العاقبة
(Mabsooth Sarkhasi, Volume 13, Page 68, Darul Marifah)
4)
[https://www.legislation.gov.uk/ukpga/1988/52/contents]
