Islamic Fatwas 1346 Fatwas Available 
Fatwa | Islamic Rulings
  Important categories:     Purification     Prayer     Fasting     Charity     Pilgrimage  
Sunday 21 April 2024  
Search FatwaIslam:         • Advanced Search
• Preferences

Home » Social Dealings » Loans and Mortgages

The difference between cooperative insurance and commercial insurance

Cooperative insurance is sometimes described as the lawful alternative to commercial insurance. In what ways do the two types differ? And what is it that makes commercial insurance forbidden and cooperative insurance permissible?

The term "Coopertive Insurance" does not mean compensation, it only means mutual cooperation in times of affliction and accidents. As for commercial insurance, the aim of it is profit and it is a form of gambling, which Allah - Almighty, All-Powerful - has forbidden in His Book, and He has mentioned it along with (drinking) Alcohol, Ansab (i.e. idols), and seeking decisions through diving arrows. This is a difference, and this is why you find that when a man lends a person a Dinar and the borrower does not return it until a year or more or less has passed, this will be correct, but if he gave him a Dinar for compensation for each Dinar, this would be wrong and forbidden. So the person's intention has an influence on changing a transaction from forbidden to permissible.

Shaykh Muhammad bin Saalih al-`Uthaymeen
Fatawa Islamiyah, volume 5 / page 21
Other subjects of interest:

Marriage and Engagement
Family and Society
Divorce and Separation
Child Custody
Buying and Selling
Loans and Mortgages

2024 FatwaIslam.Com
Fatwa - Islamic Rulings - Islamic Scholars