Ruling on Vehicle Insurance

Authored by: Fatwas of the Saudi Fatwa Committee

Insurance, including vehicle insurance, is generally deemed prohibited in Islam. This prohibition is based on its involvement in:

1. Riba (usury or interest)
2. Gharar (excessive uncertainty or deceit)

In this arrangement:

• The insured person pays a small amount and may receive a significantly larger payout, creating an imbalance.
• At times, the insured person may receive nothing, while the insurance company faces massive losses.
• This uncertainty and potential for deception violate Islamic principles.

Shaykh Ibn Baz (رحمه الله) explains that such practices involve deceptive elements and are akin to gambling, as they create unequal outcomes for both parties.

[Reference: Ibn Baz, Majmu' Al-Fatawa wa Al-Maqalat, Vol. 19, Page 315]