LivingHalal Q&A: Commercial Insurance

Question:

Salaam alaikum,

My father has spent a considerable time convincing me that it is important to get car insurance which has a high dollar amount protection for bodily injury. For example, you can get like 100k, 200k, 300k, 400k coverage for bodily injury when you buy insurance. This is the most important according to my dad, because right now my dad's brother is in a law suit with some motorcyclist who was injured when my uncle's wife crashed into him. This lawsuit is set to be pretty heavy financially on my uncle. My dad told me that if you are making a descent salary in life, people are very eager to sue you so they can drain you of money for years to come.

Therefore I began pondering is it appropriate to consider buying bare minimum insurance PLUS 200k-300k bodily injury? I am confused because it seems like a big risk even though insurance is not allowed [haram].

Answer:

Wa alaikum assalaam

Your father is right about the risk. We live in a system, where lawyers/insurance sell fear, and crooks and their lawyers embezzle hardworking people.

Insurance, however, is just a fake solution.

There are many similar stories like the one of your uncle's wife. I know a corporate CPA who got involved in an accident and the other party was at fault. The CPA forgave her, but after several days that woman sued the CPA. The insurance company did pay after a lengthy process but it also cancelled the CPA's insurance after the law suite.

So what would you do in that case? Spend even more on insurance?

Commercial insurance is just an illusion and not worth it (even from a pure business sense without talking about halal/haram). Say, if you buy a new car, lots of Muslims will tell you to buy fullcoverage, because your car is new. But chances are, even full insurance is useless, because when you scratch your car, it's below the deductible. Again, that's how insurance industry designs their policies to maximize their profits.

Commercial insurance is not set up to help consumers, but it's there to make money. So, when you as a customer costs them a loss, they will try to get even by increasing your premiums or cancelling your policy.

As for the risks that they use to convince you to buy their service, there are endless risks out there, and if we keep thinking about them, we just go nuts.

Allah never said there are no risk in life. That's why Islam is not just a set of codes of halal and haram. Islam tell us that gambling transactions (speculation) like insurance is haram, but on top of that, Islam tells us that Allah is the protector, Allah is in ultimate control, and that whoever leaves something for Allah, Allah will compensate him with better options.

So, my advice is not to argue with your father. He is not the first or the last who will tell you to get more insurance.

As Muslims, if you want a halal practical solution, donate that money (if you want) and pray for protection. Even if you get into troubles, (God forbid someone trying to embezzle you), all your mental and financial losses are compensated by Allah in this life or in the hereafter.

So, let's show some faith in Allah, by doing halal and avoiding haram.

"And whosoever fears Allah and keeps his duty to Him, He will make a way for him to get out (from every difficulty). (At-Talaq 65:2) And He will provide him from (sources) he never could imagine. And whosoever puts his trust in Allah, then He will suffice him. Verily, Allah will accomplish his purpose. Indeed Allah has set a measure for all things. (At-Talaq 65:3)"

Hope this answer helps and Allah knows best,

PS: Some states require liability insurance, if that's the case, Muslims are buying it out of necessity (being forced).

Tags: insurance halal haram.