Fatwa ID: 05388

Answered by: Mufti Javed ibn Nazir Kachhalia

Question

Please can you explain why car insurance is permissible but interest base mortgage is not when both should be haram? I would appreciate it if you would be willing to discuss this.

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

Answer

In regards to your query;

It has been written in ‘Aap ke Masa’ail aur unke Hal’:

“ Insurance is not permitted because there is an element of gambling and also interest (Riba), but in some circumstances to take up insurance (in this case car insurance) in some places and countries is obligatory, therefore, will be permissible”(Aap ke Masa’ail aur unke Hal’, Vol 6, Pg 255, Maktabh Ludhyanvi)

Whereas to take up a mortgage or loan in which interest (Riba) is included to buy a house, car or any other item is not an obligation. A person can rent a property, or at the same time get Islamic Loan or Mortgage.

Only Allah knows best.

Written by Mufti Javed ibn Nazir Kachhalia

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham