Buying compulsory car insurance by monthly installments

19-3-2016 | IslamWeb

Question:

Assalaamu alaykum. In Britain, it is compulsory to buy car insurance in order to legally drive. There are two options for payment: For example: 1. £1000 for one annual payment 2. £110 per month if a person wishes to pay in installments. This adds up to £1320. In the sharia, is the second option considered interest? May Allaah reward you.

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad is His slave and Messenger. 

Commercial insurance is based on gambling and forbidden deceit, and it is not permissible to buy it voluntarily. However, if a person is obliged to buy it, then he is not sinful, as Allaah says (what means): {…while He has explained in detail to you what He has forbidden you, excepting that to which you are compelled.} [Quran 6:119]

However, one should limit himself to the necessity, which is the least type of insurance that is permitted by law.

There is nothing wrong in paying insurance by monthly installments, and this is not considered interest.

Allaah knows best.