What is the ruling on insurance for: (shop fires, cars, and so on...)?

The Shaykh : Please go ahead.

The questioner : I want to ask a question about insurance.

The Shaykh : About?

The questioner : Insurance.

The Shaykh : Insurance.

The questioner : My Lord, Glorified and Exalted is He, has tested me... a month ago, the place of my trade was burned down.

The Shaykh : May Allah compensate you with good.

The questioner : Praise be to Allah. Everyone blamed me, and some of them who follow Allah and follow the Sunnah said that it is permissible and so on. And I, of course... I know that it is forbidden, but I want to tell you, praise be to Allah, I have no [insurance], meaning my faith in Allah is great. As for insurance on shops against fire or any other incident...

The Shaykh : First, before I answer your question, I want to confirm what you said, based on his saying (peace and blessings be upon him) This is the important point, meaning, and what is with Allah is better. As for insurance, whether on real estate, buildings, cars, or persons, all of this is gambling, without doubt. The reason for this goes back to the fact that the one dealing with insurance companies pays a certain percentage monthly or annually in exchange for something uncertain and not guaranteed. It is sufficient to know that this transaction is not a Sharia-compliant transaction, by faith, to know that it is a transaction of the disbelievers. Those are the ones whom Allah, Mighty and Majestic, described in His saying, Blessed and Exalted is He, in the Noble Qur'an, and He established a Sharia ruling based on that, which He made obligatory upon His believing servants. He addressed them, Exalted is He, by saying: The point of the verse is that Allah, Mighty and Majestic, described them as those who do not forbid what Allah and His Messenger have forbidden. So, for them, unlawful sexual intercourse is permissible, and gambling is permissible, and all obscenities, even sodomy, have been made permissible openly in some of the disbelievers' constitutions. It was not known in all the Islamic eras, whether early or late. It was not known among them what is called today insurance, in all its types and forms, some of which were mentioned earlier. These disbelievers, who do not forbid what Allah and His Messenger have forbidden, established systems to extort people's money and consume it unjustly, with deception, such that this deception is hidden from simple people. This is because they delude them into thinking that if one of them pays a certain percentage as insurance on the value of those things, every month or every year, he guarantees a good and happy life. But the truth is the opposite of that in most cases. The truth is the opposite of that. These companies are exactly like banks. Where do they live? Where do they sustain themselves? They do not engage in a permissible commercial work or an industrial profession or something similar to live from the money of these professionals in these companies. So, years pass for one of them, and no accident happens to him, and he is not hit by an accident. In exchange for what? He paid these things for nothing. An accident may happen, like your accident, or a car may be destroyed as soon as it left the agency. They compensate him with a replacement. Where did the price come from? From Zayd, Bakr, and 'Umar, those who did not have accidents, so these funds were available in very large quantities. And therefore, they compensate the one who took from them, and they remain with plenty. And with this plenty, they can live the life of kings. So this is gambling, but it is more wicked than gambling. Because the gambler may gamble, and for this it is called gambling. Between one evening and the next morning, he loses. Between one evening and the next morning, he becomes a millionaire. But these people guarantee profit in this cunning way they have taken with people. For this, we say that insurance, in all its types and forms, is modern gambling, like what is called today the lottery. The lottery is a form of legalized, organized gambling. With this, I say that anyone who is afflicted and insures his real estate or his car, and then an accident happens, and the company presents to him, according to the contract concluded between them and him, what was agreed, I see that he should take from what was presented to him what he had paid to them, in the sense of the situation: this is our merchandise, it was returned to us. As for anything beyond that, it returns to the issue of gambling for the one dealing with them. The gambling is usually in their favor. Here it is not in their favor, but in the favor of the one dealing with them. So this one has the right to take what he paid. But more than that is gambling. Therefore, if you have calculated what you paid, you take what you paid. But more than that, you are in one of two situations: either you return the rest to the company, or you put it in what is called in the language of jurists public utilities. But you do not benefit from it, not even by a single coin. This is the answer to what you asked.
The questioner : As for cars, we are ordered to pay insurance to the government.

The Shaykh : Yes.

The questioner : In the case of a person whose car is parked in the middle of the street, and someone hits it from behind, and insurance compensates me. Is it permissible for me to take that amount or not?

The Shaykh : The same answer. What did you pay?

The questioner : I paid twenty dinars, and the car was destroyed for five hundred dinars.

The Shaykh : This is it. You only need to take what you paid.

The questioner : Twenty dinars.

The Shaykh : And the rest is divine decree and destiny.

The questioner : And the rest, no.

The Shaykh : Yes, indeed

The questioner : May Allah bless you.

The Shaykh : And may He bless you.