Question:

Assalaam Alaikum
I have home insurance and my home was all cash purchased by me.
Little water leaked from inside home a/c unit which damaged some of the wooden floor. I reported insurance and they are paying me to do a proper repair.
Is this haraam?

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, insurance is not permissible as it constitutes uncertainty, interest and gambling.

Furthermore, home insurance is not a requirement by law.

Therefore, make sincere Tawbah and stay away from home insurance in the future.

The amount of money given to you by the insurance company which is equal to or less than the total amount of your contributions may be used for the repair. The amount that is in excess of your contributions is not permissible to use, as that is in the ruling of interest money. For example, if your contributions equal a total of $1,000, and the insurance company is paying $1,500 for the repair, you may only use $1,000.

The excess amount should be returned back to the insurance company. If this is not possible, then the excess amount must be given to the needy.

Note: If you have already used the excess amount, you must return money equivalent to the excess amount to the insurance company if possible. Otherwise, you must give it in Sadaqah to the needy.

And Allah Ta’āla Knows Best

(Mufti) Abdul Azeem bin Abdur Rahman

Checked and Approved by,

My Esteemed Ustadh Mufti Husain Kadodia Saheb Hafidhahullah

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