Are Security Deposits in Interest-Bearing Accounts and Insurance Permissible in Islam, and What Reliable Resources Exist to Learn Islamic Finance and Family Planning?

Answered by Mawlana Ilyas Patel

Question

Is it permissible for a landlord to collect a security deposit if the law requires it to be placed in an interest-bearing account, and are there lawful alternatives? Is landlord or property insurance permissible to protect an investment? And what reliable resources are recommended for learning Islamic finance and planning for one’s family?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

I pray you are in good faith and health. Thank you for your question.

If one is required to place a security deposit in an interest-bearing account, it is considered permissible. Furthermore, a person may be excused for taking out building insurance when there is a genuine need.

Generally, homeowner’s insurance is impermissible due to garar (gambling) and qimar (gambling). However, in light of deteriorating conditions, necessity makes the forbidden permissible. [Ibn Nujaym, al-Ashbah wa al-Nadha’ir]

Muslims must make every effort to develop Sharia-compliant schemes. Below are some links to resources in Islamic
finance:

1. Halal Investment Guides and FAQs — IFG
2. Ethica Institute of Islamic Finance
3. Amanah Advisors.

And Allah knows best.

[Mawlana] Ilyas Patel
Checked and Approved by Shaykh Faraz Rabbani

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Mawlana Ilyas Patel has received a 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. Currently, he resides in the UK with his wife and is interested in reading and gardening.