Conventional Car Insurance vs Motor Takaful

Learn in this article the differences between conventional car insurance and motor takaful to help you decide on which to buy.

Car Insurance

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You may have come across the saying that both conventional car insurance and motor takaful are similar. It is true that both share the same purpose of providing coverage to their policyholders. However, the difference is that takaful is based on the Islamic principles. But what exactly is takaful? And what are other differences between conventional car insurance and motor takaful?

Read on as we explain the differences between conventional car insurance and motor takaful.

What is motor takaful?

Motor takaful is a car insurance plan that complies with the Shariah (Islamic) law and principles. Compared to conventional car insurance, motor takaful plans are free from prohibited Islamic principles which are Riba’ (interest), Maysir (gambling) and Gharar (uncertainty).

Takaful is an alternative to the existing conventional insurance for Muslim participants, mainly to avoid these prohibited elements. However, non-Muslims, too, can purchase takaful products without any worry.

Features of takaful

The key features of takaful are risk-sharing, no claim bonus and Shariah-compliant.

Mutual risk-sharing

Takaful promotes the concept of mutual cooperation and risk-sharing among participants. Further, no transfer of risk is involved.

No claim bonus

Policyholders are eligible to receive a cash rebate from their takaful company (of at least 10%) if they do not make any claim during the period of their policy.

Shariah-compliant

Takaful scheme adheres to Shariah law that is without dubious transactions. It also disallows the prohibited elements in Islam which are Riba’ (interest), Maysir (gambling) and Gharar (uncertainty).

Features of takaful

Differences between takaful and conventional insurance

As we have mentioned earlier, both motor takaful and conventional car insurance share the same purpose of providing insurance coverage to their policyholders.

However, her are major differences between both of them.

Differences between takaful and conventional Insurance

Can Muslims invest in conventional insurance companies?

Based on the information that we have provided, conventional insurance may have the elements prohibited in Islam which are Riba’ (interest), Maysir (gambling) and Gharar (uncertainty). In contrast, takaful is free from these prohibited elements.

For Muslims, it is obligatory for them to seek what is halal and complies with the teaching of Islam.

Further, according to Muzakarah Jawatankuasa Fatwa Majlis Kebangsaan Bagi Hal Ehwal Ugama Islam Malaysia (MJFK), purchasing conventional insurance products including general and life insurance is not in compliance with the religion of Islam, primarily because they contain the three prohibited elements that we have mentioned earlier.

Should you get conventional car insurance or motor takaful?

Based on what we have shared, conventional car insurance and motor takaful share the same purpose of providing coverage to policyholders. Both also offer coverage for policyholders’ vehicles in the event of accidents, fire and theft. However, for Muslims, it is obligatory for them to purchase motor takaful as it is free from the forbidden elements in Islam.

Further, Anas bin Malik narrated that Prophet Muhammad (peace be upon him) said: “Finding what is halal is an obligation for every Muslim,” narrated by Al-Thabarani with a good sanad.

At Bjak, we offer both conventional insurance and takaful for our customers. You can compare across 15 insurance and takaful providers in Malaysia. Simply visit Bjak.my to get your free motor insurance and takaful quotations today.