Fatwa ID: 03292

Answered by: Maulana Shadman Ahmed

Question

A person owns a caravan park and the park is located in a cyclone-prone area (high risk).

Can this person insure his building because his park is located in such an area?

Let's say if this person insured the building and the building was hit by a cyclone, can he recover what he had paid to the insurance company as premium?

بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم

In the name of Allah, the Most Gracious, the Most Merciful 

Answer:

Insurance of any type is not permissible due to it resembling interest and gambling. Its resemblance to gambling is because the premium that is paid is in lew of an uncertain service or product. As for its resemblance to interest is due to the premium that was given is seen as a loan in Islam and when the company pays back it is more.[1]

If there is a dire need such as the situation you described, then it would be permissible to get insurance.[2] Dire need is established when: 1- There is a fear of loss of life or limbs, 2- There is an active-immediate need rather than a potential need, 3- There is no other permissible option other than the one that is impermissible, and 4- If doesn’t harm other individual’s life or property.[3]

Please note that if the property was damaged and the insurance company gives you money, you may only take equivalent to the damaged property.[4]

For added information please read the following,
https://daruliftabirmingham.co.uk/is-it-permissible-for-me-to-insure-my-house-if-i-pay-no-interest/

Only Allah knows best.

Answered by Maulana Shadman Ahmed.

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham