Mortgage and Car Insurance

Mortgage and Car Insurance

Question:

I currently rent a property to avoid paying a mortgage. Most of my friends and some of my extended family members have mortgages and criticise me for having double standards because I undertake car insurance which they claim is also haraam. I feel confused. How can I answer them properly?

Answer:

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

Usury, interest transactions and mortgages are totally prohibited in Islam. There are grave warnings promised in the Qur’an and Sunnah for the one who involves himself in interest based transactions.

Allah Most High says:

“Allah has permitted trade and forbidden Usury…. If you do not abstain from interest and Usury, then be warned of war from Allah and his Messenger.” (Surah al-Baqarah, V:275 & 279)

Your choice of renting a property and refraining from mortgage is commendable and Insha Allah you will be rewarded. Take no notice of what others have to say and Insha Allah, Allah will assist you.

As far as the insurances are concerned, all forms of commercial Insurance prevalent in the traditional Insurance companies are prohibited and against Islamic principles because they have either an element of Riba (Interest) or Qimar (Gambling). (See for details, posts on this website).

However, it should be remarked that since third party insurance is a mandatory legal requirement for every car-owner, one can affect this kind of insurance, as it is not possible for one to avoid it.

Thus, if you have a third party insurance on your car, then there is nothing for you to worry about. There is no double standard in taking out the mandatory third party insurance. However, if you involve yourself in other types of insurances, you should abstain from that also.

And Allah Knows Best

[Mufti] Muhammad ibn Adam
Darul Iftaa
Leicester , UK

Question #: 5919
Published: 03/03/2004

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