FAQ

What is Insurance?

It is a way of providing compensation for one who has suffered loss resulting from an unforeseen accident.
  

What is Islamic Insurance (Takaful)?

Takaful is an Arabic word, which means “togetherness”. It is an alternative to conventional insurance, and it is based on the principles of Co-operation and supporting other members of the community.

It observes the rules and regulations of Islamic law. This concept has been practiced in various forms for over 1400 years. It originates from Arabic word Kafalah , which means "guaranteeing each other" or "joint guarantee". In principle, the Takaful system is based on mutual co-operation, responsibility, assurance, protection and assistance between groups of participants.

For example, a group of persons agree to share certain risk (e.g. damage by fire) by collecting a specified sum from each other. In case of loss to anyone in the group, the loss is met from the collected funds

What are the principles of Takaful?

The principles of Takaful are as follows:

• Policyholders co-operate among themselves for their common good.
• Every policyholder pays his subscription as donation to help those that need assistance.
• Losses are shared and liabilities spread according to the community pooling system.
• Uncertainty is eliminated in respect of subscription and compensation.

It does not derive advantage at the cost of others.

Who are the parties in a Takaful Contract?

Any contract is made between two parties and a Takaful policy as such involves:

• The Company : Providing the service to the community.
• The Takaful participant : Who wishes to have cover against risk of suffering a financial loss resulting from fire, accidents, burglary, etc.
   
  

Why buy a Takaful Cover?

• A Takaful policy or any other insurance policy for that matter will not prevent the accidents from happening.
  
  
• It will put the one who has suffered loss in the same financial position as before the loss (If he loses AED.1 he will get back AED.1, albeit with some modification in certain cases).
  
  
• People & corporations have a need to buy Takaful cover because it removes part of the uncertainty associated with Risks.
  
  
• Business continuity and peace of mind.
  
  
• Benefits to the community by sharing the risks amongst participants.
  
  
• Unlike other methods of insurance the money which is paid by the Takaful Participant as a contribution is still considered his/her own money and he is entitled to a share of the Takaful fund surplus if he/she do not suffer claims.
  
  
• A Takaful product is also produced in line with Islamic Principles as approved by a Sharia Board.
  
  

What is Risk?

Risk in Takaful & also in conventional Insurance means the probability of an undesirable future event to occur and as a result financial loss will be suffered.
 

 What are the Elements of a Takaful Contract?

•  Proposal form : for all types of Takaful contracts, the participant has to fill a proposal form, duly signed by him and this is considered as the basis of the contract.

•  The Takaful policy : A document mentioning the terms, conditions and the procedure if one suffers loss and wishes to raise a claim on the company for reimbursement.

What is Takaful amount (Sum covered)?
It is the maximum liability of a Takaful company towards a physical property
 

What is the condition of average?

It is a condition in some policy wordings making it compulsory for the Participant (insured) to declare the actual value of the property to be covered, otherwise his indemnity will be reduced proportionately.

What is Indemnity?

It is a principle of insurance promising to place one who has suffered loss in almost the same financial position as before the loss.
 

What is Insurable Interest?

It is a principle of insurance stating that the insurance proposer has to have a legal and financial relationship with the subject matter of insurance.

What are material facts?

They are facts relating to the subject matter of insurance and have influence over the identification or quantification of risk. These facts have to be declared by the participants.

What is Subrogation?

It is also a principal of insurance stating that in case of a third party causing damage to the subject matter insured then it is the right of the insurance company to step in the shoes of participant and claim recovery from the third party after having compensated the Participant.
 

Can I insure my car or property with more than one insurance company?

The answer is no, as the indemnity will be only once and it will be shared amongst the companies if more than one insurance company is involved.
 

Can Non-Muslims take Takaful?

Yes of course! What is important, as participants or user of the product, is that he must agree to and abide by the terms and conditions of the contract that are based on the rules of Sharia. The terms and conditions shall be applicable to both Muslim and non-Muslim participants .