Assalamu Alaykum
I work as a doctor in a western country and we are required by law to have what is called: professional indemnity insurance. This is used in cases where a doctor makes a mistake and they are ordered by a court or have to compensate a patient of theirs for injury, accident or neglect. The amount paid to the patient is often very high (can be millions of dollars). I get my insurance indirectly by paying and subscribing to an academic service who takes out collective insurance on behalf of all of its members, but want to know what the ruling is on using the insurance in case of a claim being made against a doctor. Can they let the insurer pay on their behalf (the payout value will be much higher than what the insurance cost), is this considered riba, as it is higher than what they paid overall for insurance? Also is there any sin in using it if this is the case, as the doctor wouldn't be able to pay that amount on their own? Please advise.

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad, is His slave and Messenger.

The basic principle is that it is not permissible to buy commercial insurance policies. However, there may be certain situations that warrant deeming it allowable, especially if there is a prevalent need for it. An example for this is the case of the Muslim communities in the Western countries where there is no Sharee‘ah-acceptable alternative available. Therefore, the Resolution of the European Council for Fatwa (6-7) states:

“There are situations and environments that require solutions to address special conditions and meet their requirements, as is especially the case of the Muslims in Europe, where commercial insurance prevails, and there is a dire need to benefit from it in order to prevent the dangers to which they are often exposed in their life in all its forms, especially in the absence of an Islamic alternative – Takaaful (cooperative) insurance – and the difficulty to find it at the present time. Therefore, the Council issues a Fatwa to the effect that commercial insurance is permissible in the following cases and what is similar to them:

- Cases where insurance is legally binding, such as the case of third-party insurance on vehicles, machinery, equipment, workers and employees – social security or retirement – and some cases of health or educational insurance and the like.

- Cases of need for insurance to ward off difficulties and severe hardship, whereupon the existing deceit clauses in commercial insurance policies is forgiven. Examples:

a. Insurance on Islamic institutions such as mosques, centers, schools, and so on.

b. Insurance on vehicles, machinery, equipment, houses, and professional and commercial establishments in order to ward off risks that cannot be covered, such as fire, theft, and the malfunction of the various facilities.

c. Health insurance in order to avoid the high costs that may be incurred by the beneficiary and his family; this is either because of the absence of free health coverage, its slowness (in providing the health service), or its low quality.” [End of Quote]

All of what you mentioned about the situation of these doctors and the fact that they may be overburdened with fines and amounts imposed by the court to which the claimants refer the disputes, and them being unable to afford them, or that bearing them would cause a serious hardship for them; all of this warrants permitting them to buy insurance policies to ward off this harm. This is supported by the abovementioned resolution stating the permissibility of buying commercial insurance policies in these countries to “ward off difficulties and severe hardship.”

Accordingly, if the insurance company pays more than the actual fees paid by the beneficiaries, there is no sin on their part, Allah willing.

Allah Knows best.