Buildings Insurance In Diminishing Musharakh

Nov 28, 2023 | Business & Trade



I recently purchased a home with the company called Pfida which utilises a diminishing musharakah model.

They have stated that their model if fully shariah compliant however upon agreement, within their terms and conditions, customers have to undertake home buildings insurance upon acquisition.

I recently sent them a query regarding the buildings insurance process and explained my personal preference, and stance of not wanting to undertake conventional insurance as this is contrary to traditional Sharia values. As a suggestion to overcome this issue I explained a workaround which would be for Pfida to undertake the buildings insurance as part of the acquisition cost of the property as opposed to the customer and as a result amend my monthly payments accordingly. However this request was declined.

They responded to say it is a necessary part of the agreement and suggested that some insurance providers operate by mutual and co-operative based on the same principles as Takaful however would not specify further and leave the choice to me to as to which provider to choose from.

I have opted for a cooperative insurance however could you advise what I should do going forward in the coming years given there is currently no Takaful alternative in the UK?

Jazakallah khayran


Although the default ruling for undertaking home insurance is that it is impermissible, there seems to be leeway in doing so at times of need. This is only in the actual absence of Shari’ah-compliant alternatives and on the basis that the company is necessitating the insurance and the insurance is deemed subordinate to purchasing the house. Some scholars grant dispensation to take home insurance to provide more protection where there is a potential of suffering unbearable loss such as in areas of civil unrest or constant threat of litigation from people. Nonetheless, if there is no choice but to take out the insurance, we would advise you only take out the level of cover required to fulfil the need and try to remove yourself from it as soon as possible. Of course, seeking forgiveness from Allah will also be advised.

الأشباه والنظائر لابن نجيم (ص: 73) – الضَّرُورَاتُ تُبِيحُ الْمَحْظُورَاتِ

فتح القدير للكمال ابن الهمام (8/ 409) – قوله تعالى: {وما جعل عليكم في الدين من حرج} [الحج: 78] ولا شك أن في دفع الضرر عن نفسه دفع الحرج

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel