Insurance in Islamic Law

Insurance in Islamic Law 

Difficulties with Commercial Insurance in Islamic Law

The question of insurance is a major concern of contemporary Islamic jurisprudence. Insurance is an important part of the modern business environment and it plays a vital role in today’s economy. In some cases, people are required by law to take out insurance of one form or another. Many countries make owning automobile insurance a precondition for owning a driver’s license or subscribing to group health insurance a precondition from being allowed to employ others. Financiers often will not loan money unless the property being used as collateral for the loan is insured against loss.

Moreover, people can see that there are clear and undeniable benefits to be had from taking out an insurance policy. An insurance policy provides its holder with a measure of financial security. If a person has health insurance, he can be reasonably confident that medical care will be available to him. If a person has homeowner’s insurance, he is very likely not to be homeless if his house burns down.

For these reasons, Muslims are naturally quite concerned about the permissibility of this kind of business and to what extent they can participate in it. It is one of the most extensively discussed of contemporary issues in Islamic Law and at the same time one of the issues that is most often misunderstood by the general Muslim public.


The purpose of this article is to dispel the commonly held misunderstandings surrounding this issue and to explain exactly why Islamic Law has so many difficulties with commercial insurance. In order to do this, it is necessary to have a correct understanding of what commercial insurance is in next post.