Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
It is established among scholars that commercial insurance is prohibited, while cooperative insurance is permissible. But if there is no cooperative insurance and the people responsible for the mosques are afraid to risk loss of the mosques, necessity dictates then that they be given a dispensation to resort to commercial insurance to avoid this risk. This dispensation lasts until there is established lawful cooperative insurance by which they can insure the mosques lawfully and get rid of the commercial insurance.
In his response to your question, Dr. Salah As-Sawi, the Secretary General for the Assembly of Muslim Jurists in America (AMJA), states:
Are commercial insurance contracts valid?
It is established among scholars that commercial insurance contracts are invalid, for they are based on interest, gharar (undue uncertainty), and gambling as mentioned in detail in the resolutions issued by the juristic academies to the effect that insurance contracts of this kind are prohibited.
The Islamic alternative in this respect is the cooperative insurance system which is based on cooperation and donation among its members to help one another.
Under this system of insurance, the organizing members are regarded as insured and insurers simultaneously; each member pays a certain amount of money and has a share in its profits and losses (according to the amount he has paid therein).
Many huge companies in the East have successfully adopted this system. So have done also many Islamic banks, which, by this, are offering an Islamic alternative to the prohibited kind of insurance in the investment world.
Purchasing Property/Risk Insurance for Mosques
As for the question in hand, we are first to say that there is an Islamic dispensation that permits some prohibited things under the compulsion of necessity.
Hence, if it is proved that the mosques in question is really under the risk of loss and insuring it would avoid loss, and that there is no lawful cooperative insurance system in the country where the mosques are but only that which is based on usury, a dispensation may be given to the people responsible for the mosque to insure it according to this system until there is established an Islamic alternative.
In this latter case, the mosque is to end its contract with the commercial insurance company and enter in a new one with the Islamic cooperative insurance system.
Almighty Allah knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.