I am buying a new car and wanted to know if Gap Insurance is halal?

I was looking for a car and they offered me something called gap insurance.

This is the description they gave “ Guaranteed Asset Protection (GAP) is designed to cover a motorist’s financial shortfall in the event of a vehicle being involved in an accident, stolen, destroyed by fire or flood and declared a total loss by your motor insurer. Under these circumstances, your motor insurance will typically pay you the market value at the time of the loss, not what you originally paid for the vehicle.

Here how it works – It’s actually it is very straight forward… Gap is a depreciation insurance product for motor vehicles, new or used. In the event that the vehicle is declared a total loss you do not suffer a financial disaster.

If you have the misfortune that your car is declared a total loss by your motor insurer (sometimes called ‘written off’), your insurer will offer you a final settlement based on the vehicle’s value on the day of the accident.

This is very unlikely to be the amount that you paid for the vehicle as the insurer will base the settlement on the second hand value of your car at the time of the accident. This limits your options for replacing it.”

Please can you let me know the Islamic ruling on taking this.



May Allah bless you.
This sort of insurance is not permissible.
There is usually 2 opinions on insurance:

  1. insurance is haram and it is tolerated only to a certain degree, for example: when it is a legal requirement like for car insurance. This opinion is of the majority of scholars around the world
  2. insurance is halal only when it is to cover for a loss and there is no financial gain.
    My opinion is that the GAP insurance does not need to be tolerated as it is not a legal requirement and neither it is halal in itself.
    @ibrahimkhan may offer his opinion on this matter.

And Allah knows best!

Jzk khayr Mufti saab.

The standard view is as you put it.

The minority view is that mainstream insurance is generally permissible. This is my view as explained in this video. This is not a fatwa, just a discussion of views of more knowledgeable people than I.

Ultimately you should do what you are most comfortable with and go with scholars you trust.


JazakAllah khair brothers