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Fatwa CenterSham insurance is false witness
Question
What is the ruling on using a sham insurance form that is issued for taking a loan for buying a car, taking into consideration that there are some insurance institutions that give this form in return for making obligatory insurance on the car. Other institutions give this form in return for a certain amount of money. The authority that gives the loan knows the ways that are used in order to get such forms, as the criteria of insurance institutions do not apply to the car specifications, as they say that the car should be new, while my car is not new.
Answer
All perfect praise be to Allaah, the Lord of the worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
As long as the form is not real and it is sham insurance that is given to you by virtue of an agreement between you and the insurance institution, it is a kind of witness to falsehood and it is impermissible to make use of it or even obtain it. The fact that the authority that gives the loan knows this is not a pretext for making this sham insurance and does not free your liability from the legal responsibility that results from this.
We advise you to tell the authority concerned about the truth as they may consider you an exception and not ask you to obtain this form. If they did not do so, then you should not take this loan in order to free your liability and preserve your religion.
Allaah Knows best.
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