How Much of an Interest-Based Court Settlement Is Halal?

Answered by Mawlana Ilyas Patel

Question

I won a court case against an insurance company for non-payment. The judgment awarded me XX amount, including interest over ten years. The vehicle involved depreciated heavily during the legal battle. How much of the settlement is halal, and can I deduct the vehicle’s worth from the awarded amount?

Answer

Yes, you are only entitled to the worth of your vehicle, so the money is halal and can be used for personal benefit or charity. The remainder of the settlement figure should be given to charity.
If you pay for insurance, you should only claim the amount you have contributed. If you claim more than that, it would be considered interest because it is an exchange of money for money where one party gains and the other loses.  [Usmani, Fiqh al-Buyu]

I would like you to go through the valuable answers and links below. In sha Allah, you will receive guidance and direction.

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I pray this helps answer your question.
[Mawlana] Ilyas Patel
Checked and Approved by Shaykh Faraz Rabbani

Mawlana Ilyas Patel has received traditional education in various countries. He started his schooling in the UK and completed his hifz of the Quran in India. After that, he joined an Islamic seminary in the UK, where he studied secular and Aalimiyya sciences. Later, he traveled to Karachi, Pakistan, and other Middle Eastern countries to further his education. Mawlana has served as an Imam in the Republic of Ireland for several years and taught the Quran and other Islamic sciences to both children and adults. He also worked as a teacher and librarian at a local Islamic seminary in the UK for 12 years. Presently, he lives in the UK with his wife and is interested in books and gardening.