Question
We purchased a car on finance via ____ bank. We were informed that in order for us to receive the car we need an insurance certificate. Which we decided to take out insurance with the intention of canceling immediately to release the car.
We arranged for the insurance to fall into place the day we intended in receiving the car, they informed us they will debit money for the insurance at 12am on the day on receiving the car . They informed us If the money is not paid there will be no cover ,hence no insurance.
Allah made it such that the debit was refused by the bank resulting in no insurance policy on our behalf الحمد لله
When we called the insurance company to cancel out insurance policy the next day. The insurance company noted they will inform the bank we’re canceling the insurance. (According to the insurance company : the bank will enforce insurance their insurance on us) we will ان شاء الله ﺗﻌﺎﻟﯽٰ make no effort in getting insurance however.
Please advise if this happens (bank enforcing insurance on us) is there a way we can move ahead without actually getting insurance? Perhaps paying but never claim or something to the effect.
I’ve also heard of takaful ‘Sharî’ah compliant insurance’ is this correct?
Answer
We assume from your query that you have no issue with the bank finance as it is in accordance to Shariah (according to you) but your issue is the insurance required by the financer. Whereas, we cannot vouch for the Shar’i compliancy of the deal. We, therefore, advise staying away from Bank financing; whether it is called “Islamic” or not. Had the financing been Shari’ah complaint and the problem was the insurance alone then we have the following advice to offer:
The one way of overcoming the issue is by procuring an interest free loan from either some friend or family member which should then be used to offset the bank loan. You will then pay the friend or family member until the debt is paid in full. In this case you will not have to subscribe to any insurance policy.
The second option will be to sell the vehicle either privately or to a reputable dealer and offset the bank loan. You may then purchase a cheaper vehicle within your reach or by securing a private loan until Allah e opens the way. By adopting this option, you will be protected from subscribing to an insurance policy as well.
Another option will be to sell the car to some affluent person for let us assume R50 000.00. He buys the car and takes possession of the vehicle. He is now considered the owner of the car. You settle the bank with the said funds. This person then sells the vehicle to you at any price which both parties agree upon in fixed terms over a fixed period of time. In this way, there is no need to subscribe to any insurance policy and the transaction will be Shariah compliant.
Due to the impermissibility of all types of insurance in the light of Quraan and Hadith, we do not approve of any insurance whether Takaful or otherwise.
Checked and Approved By:
Mufti Muhammed Saeed Motara Saheb D.B.