Is optional insurance coverages like comprehensive coverage rather than just liability insurance required by law for a car, optional home insurance or flood insurance are allowed in Islam?
بسم اللہ الرحمٰن الرحیم
الجواب ومنہ الصواب
In essence, insurance is forbidden because it involves interest and gambling.But insurance which is mandatory by the government is allowed under compulsion.However, as much insurance is necessary to avoid litigation, or a legal action is allowed.
Therefore, insurance which:
a. is not legally necessary,
b. or a comprehensive insurance coverage purchased solely for convenience and for personal benefits,
is not permissible according to Shariah rules.
(مستفاد از ھکذا فی فتاویٰ عثمانی کتاب الربا والقمار والثامین :۳؍۳۱۴)
فقط واللہ اعلم بالصواب