Is public liability insurance permissible as it can mitigate substantial difficulty for me and my business? On the government website it is strongly recommended and in some countries mandatory. I can’t see the point in starting a venture, if at any moment, a claim could potentially put me out of business
May Allah bless you.
Taking insurance when it is a legal requirement, or when it is to protect yourself against an unbearable claim, is permissible.
If its to protect your business losses, then its not permissible unless its a legal requirement.
Mufti Zubair Butt has written a nice explanation about a similar question. Please see link:
And Allah knows best!
Salam, thanks for the reply.
Could you please clarify as I am slightly confused. What is the distinction between “unbearable claim” or “intolerable litigation” (as Mufti Zubair mentioned in the link) and protecting business losses?
So if one pays for public liability insurance (used to protect against a potential future claim that could pose great hardship like you mentioned) with this intention only in mind, then it is permissible? As opposed to insuring different parts of your business to offset potential loss with the intention of profit at the end of the day?
The way I see it, you should insure yourself if you are in an industry where you could potentially be sued for something that, if you are found guilty, you would be liable to pay a huge amount in compensation.
For example, if someone has an accident on your premises, or a product you sold has led to someone’s death etc.
However, you should not use an insurance to get compensation in the event of loss of stock.
Jzk Mufti. Ye Im inshallah going to sell my own snack bars online which as you can imagine carries substantial risk with regards to people’s food allergies / contamination etc. Potential compensation payouts could therefore be massive (Inshallah it never comes to this). So public liability was purely to mitigate this type of hardship.