Extended warranties

Many retailers and agents offer the sale of an extended warranty. In my opinion, I see this more or less like a finite insurance policy with limited coverage, so it should be subject to the ruling of conventional insurance due to the element of Gharar in the transaction. Am I thinking correctly or am I missing something that would in fact make extended warranties more Sharia compliant than conventional insurance?

Jazakom Allah


May Allah bless you
Some scholars are of the opinion that if the extension is bought at the same time of purchasing an item, then it would be permissible. They consider the price of the extension as part of the price for the asset.
On the other hand, if you purchase the extended warranty on its own, then they consider this to be impermissible.

And Allah knows best!

Assalamu alaikum @Mufti_Billal

On the other hand, if you purchase the extended warranty on its own, then they consider this to be permissible

Did you mean to say impermissible?

jazakAllah for pointing it out. I have corrected the error. Please see above.

Jazaak Allah Mufti Bilal.

Does that mean that an insurance product sold with the product at a point of a sale (bundled) with the premium paid upfront and no excess fee can pass as Sharia compliant?

I’m thinking if a 3rd party insurer wanted to offer a Sharia compliant option. The option above will not be as appealing as a takafuli policy but just out of curiosity.

Salam @Mufti_Billal

One related question on this topic. My understanding of insurance is that the concept is ok on its own but the problem lies as to where the insurer has invested the premiums to fund back any claims - generally non-shariah-compliant and hence conventional insurance is not allowed.

Keeping above in context, Am I correct in thinking that extended warranties purchased from 3rd parties are impermissible as these are typically conventional insurance whereas extended warranties offered by the “manufacturer” should be accepted as their business is not the usual conventional insurance.



May Allah bless you.
Yes, extended warranties bought on its own are usually considered impermissible.
However, some scholars are of the opinion that if its bought at the time of purchasing the asset, then it will be considered permissible. They consider the customer to be purchasing one asset at a surplus price with an added benefit.

And Allah knows best!