Fatwa ID: 08521
Answered by Mufti Muhammad Altaf Hossen
Question:
When renting a car, is it permissible to take out higher insurance to reduce the deposit?
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
The reason why all forms of commercial insurances prevalent in modern trade are unlawful and against the principles of Shariah, is that they have either an element of interest (riba) or/and gambling (qimar), both of which have been explicitly and sternly forbidden by Allah Most High in the Qur’an in Surah Baqarah 274- 278.
Insurance is chancing in the sense that the premiums are paid for certain, whereas the return is uncertain. You may lose all the premiums you paid or may receive in return more than what you paid. This is known as chancing or gambling. There is also an element of interest here, as money is being exchanged for money, and one party pays less and receives more in return.
In Hanafi jurisprudence, engaging in higher insurance contracts is generally considered impermissible due to elements of uncertainty (gharar) and gambling (maysir). However, when renting a car, companies often require a substantial deposit to cover potential damages, offering an alternative option to pay a daily fee for additional coverage, thereby reducing or waiving the deposit.
Abul Hasan Burhan Uddin had said in الهداية في شرح بداية المبتدي’ (3)’
قال: “وعن تلقي الجلب” وهذا إذا كان يضر بأهل البلد فإن كان لا يضر فلا بأس به، إلا إذا لبس السعر على الواردين فحينئذ يكره لما فيه من الغرور والضرر.
In this situation, in the case of paying insurance for the rental of car, one needs to determine whether chancing or interest is involved. If not, then it would be permissible to pay this type of (so-called) insurance.
If the insurance per day is paid and nothing is gained in return, then there is not an element of Riba here, as Riba constitutes paying an amount and receiving/giving more. It would be just regarded as an additional payment of rental. However, it could be said that in case of damage to the car, one is liable to pay the company for the damages, and the cost for these damages may be more than the actual amount paid, thus including it in the definition of Riba.
Therefore, the best way to avail from this type of insurance is that one stipulates in agreement with the company that the insurance paid be included in the rental fee for the car, and any damages to the car is considered to be excused by the car company. In this way, it seems that this type of insurance is permissible.
References:
Surah Baqarah (274- 278)
٢٧٤ الَّذِينَ يُنْفِقُونَ أَمْوَالَهُمْ بِاللَّيْلِ وَالنَّهَارِ سِرًّا وَعَلَانِيَةً فَلَهُمْ أَجْرُهُمْ عِنْدَ رَبِّهِمْ وَلَا خَوْفٌ عَلَيْهِمْ وَلَا هُمْ يَحْزَنُونَ
Those who spend their wealth by night and day, privately and publicly, will receive their reward from their Lord. They have nothing to fear, nor shall they grieve.
٢٧٥ الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا ۗ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ۚ فَمَنْ جَاءَهُ مَوْعِظَةٌ مِنْ رَبِّهِ فَانْتَهَىٰ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ ۖ وَمَنْ عَادَ فَأُولَٰئِكَ أَصْحَابُ النَّارِ ۖ هُمْ فِيهَا خَالِدُونَ
Those who swallow usury will not rise, except as someone driven mad by Satan’s touch. That is because they say, “Commerce is like usury.” But God has permitted commerce and has forbidden usury. Whoever, on receiving advice from his Lord, refrains, may keep his past earnings, and his case rests with God. But whoever resumes—these are the dwellers of the Fire, wherein they will abide forever.
٢٧٦ يَمْحَقُ اللَّهُ الرِّبَا وَيُرْبِي الصَّدَقَاتِ ۗ وَاللَّهُ لَا يُحِبُّ كُلَّ كَفَّارٍ أَثِيمٍ
Allah condemns usury, and He blesses charities. God does not love any sinful ingrate.
٢٧٧ إِنَّ الَّذِينَ آمَنُوا وَعَمِلُوا الصَّالِحَاتِ وَأَقَامُوا الصَّلَاةَ وَآتَوُا الزَّكَاةَ لَهُمْ أَجْرُهُمْ عِنْدَ رَبِّهِمْ وَلَا خَوْفٌ عَلَيْهِمْ وَلَا هُمْ يَحْزَنُونَ
Those who believe, and do good deeds, and pray regularly, and give charity—they will have their reward with their Lord; they will have no fear, nor shall they grieve.
٢٧٨ يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِنْ كُنْتُمْ مُؤْمِنِينَ
O you who believe! Fear Allah, and forgo what remains of usury, if you are believers.
Surah Maidah – 90
٩٠ يَا أَيُّهَا الَّذِينَ آمَنُوا إِنَّمَا الْخَمْرُ وَالْمَيْسِرُ وَالْأَنْصَابُ وَالْأَزْلَامُ رِجْسٌ مِنْ عَمَلِ الشَّيْطَانِ فَاجْتَنِبُوهُ لَعَلَّكُمْ تُفْلِحُونَ
O you who believe! Intoxicants, gambling, idolatry, and divination are abominations of Satan’s doing. Avoid them, so that you may prosper.
(3)The name of the book
كتاب الهداية في شرح بداية المبتدي
Topic: كتاب البيوع Bab: باب البيع الفاسد فصل فيما يكره
Volume: 3 pg 53
Only Allah (عز و جل) knows best.
Written by Mufti Muhammad Altaf Hossen
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
