Is Insurance allowed in Islam?
Some scholars think that insurance is haram (a friend quoted Dr Israr that its just like gambling), others say its okay. Whats your opinion? Should I get my 15 year old car insured or not.
Those who believe that the business of insurance is not permissible base their view on the following reasons:
i) Most of the funds of the insurance business are invested in interest-based investments, which is clearly forbidden.
ii) Insurance business is not very different from maysir (gambling).
Those who feel that insurance is permissible, feel that although most of the investments of insurance business today are interest-based, it is not a necessary part of the business of insurance itself. If Islamically acceptable avenues of investment were available, insurance companies would invest their funds in them to get returns on their idle funds. As for the other criticism, they say that insurance is not gambling because gambling is a useless game of chance while insurance serves a very useful economic purpose of providing a sense of security to the individuals and businesses.
I believe that the first point of view is correct. I would want you to first make up your mind as to whether you agree with the first view or the second one. Your decision of getting your car insured should be based on what you think is the correct understanding about the insurance business.