Liga Asuransi – In everyday life, vehicles are a valuable asset that must be protected from various risks such as accidents, theft or natural disasters. Car insurance Sharia exists as a protection solution that not only provides financial security, but is also in line with Islamic principles.
This insurance is based on a mutual assistance system (tabarru’), where participants help each other in bearing risks by setting aside a portion of their contributions into a joint fund. These funds are then managed by the insurance company as a manager (representative) who ensures claims can be paid to participants who experience a disaster. With this system, sharia car insurance is free from elements of usury, gharar (uncertainty), and maysir (speculation) which are prohibited in Islam.
Definition and Basic Principles of Sharia Insurance
Car insurance Sharia is present as a vehicle protection solution that not only provides financial security but is also in accordance with Islamic principles. This concept ensures that transactions in insurance are free from elements of riba (interest), gharar (uncertainty) and maysir (speculation), which are prohibited in Islamic teachings.
Understanding Sharia Car Insurance
In simple terms, sharia car insurance is a form of vehicle protection that is based on the principle of mutual assistance (ta’awun) between fellow participants. In this scheme, participants deposit contributions (tabarru’ funds) which are used to help other members who experience a disaster, such as an accident or vehicle theft.
In contrast to conventional insurance, where the premiums paid become the full rights of the insurance company, in sharia insurance the funds remain the property of the participant and are only managed by the insurance company as a representative or manager (takaful operator). This creates transparency in fund management and ensures that excess funds are not fully owned by the company, but can be returned to participants in the form of an underwriting surplus if there are no large claims within a certain period.
In other words, sharia car insurance provides vehicle protection guarantees that are in line with Islamic values, where all transactions are carried out with clear contracts and are free from prohibited elements.
Basic Principles of Sharia Insurance
To ensure that the sharia insurance system runs in accordance with Islamic provisions, there are several basic principles that form the basis of its operations:
✅ Tabarru’ (Help-Help)
Insurance participants set aside their funds as voluntary contributions which will be used to help other members who experience disaster.
This concept eliminates the element of buying and selling risk as in conventional insurance.
✅ Mudharabah or Wakalah bill Ujrah
In sharia insurance, the company acts as a fund manager, not the owner of the funds.
- Mudharabah: The company manages participant funds and the profits are shared according to the agreement.
- Wakalah bill Ujrah: Participants give trust to the company to manage funds with a fee or ujrah system.
✅ Distribution of Underwriting Surplus
If in one period not many claims are submitted, the collected underwriting surplus will be redistributed to the participants or used for the common good.
This ensures that participants still receive benefits if they do not submit a claim.
With this principle, sharia car insurance is more oriented towards justice and transparency, in contrast to conventional insurance which is oriented towards company profits.
How are funds managed in sharia insurance?
Fund management in sharia vehicle insurance is carried out in a transparent manner and in accordance with Islamic principles. The following are the main stages in managing funds:
- Participants Contribute to the Tabarru’ Fund
Each participant sets aside a certain amount of contribution which will later be used to help other members who are at risk.
- Insurance Company Acts as Fund Manager (Deputy)
The insurance company does not own participant funds, but only acts as a manager (takaful operator).
Fund management is carried out in accordance with sharia principles and is supervised by the Sharia Supervisory Board (DPS).
- Claim Payment from Tabarru’ Fund
If participants have an accident or lose their vehicle, the claim will be paid from the tabarru’ funds collected.
- Underwriting Surplus Returned to Participants
If there are no major claims during one period, the remaining funds will be returned to the participants or used for mutual interests, according to the agreement.
With this system, sharia insurance provides a higher sense of justice than conventional insurance, because participants still have the right to the funds they deposit and get greater benefits if no claims occur.
Differences between Sharia and Conventional Car Insurance
When choosing vehicle insurance, many people are confused between sharia car insurance and conventional insurance. Both have the same goal, namely providing financial protection against the risk of accidents, theft or vehicle damage. However, there are fundamental differences in the management system, contracts, fund ownership, and principles used.
For those of you who want to understand the differences more deeply, here is a comparison between sharia and conventional vehicle insurance based on the main aspects of insurance management:
- Management Systems: Help vs Company Profits
In sharia car insurance, the management system is based on the concept of mutual assistance (tabarru’), where participants set aside funds into a joint account which is used to help other participants who experience disaster. Insurance companies only act as fund managers, not fund owners.
Meanwhile, conventional insurance is oriented towards business profits. The premiums paid by participants become the full rights of the insurance company, and their management is not always transparent. If there is no claim, the funds remain the property of the company and are not returned to the participant.
- Contracts in Sharia vs Conventional Insurance
In sharia insurance, there are two types of contracts used:
✅ Wakalah bill Ujrah (representation agreement) → Participants give a trust to the company to manage funds in return for a fee (ujrah).
✅ Mudharabah (profit sharing agreement) → Profits from managing investment funds are shared between participants and the company according to the agreement.
In contrast, conventional insurance uses a sale and purchase agreement, where participants buy protection from a company at a certain price (premium), and the risk is transferred completely to the insurance company.
- Profit Sharing and Underwriting Surplus
One of the advantages of sharia insurance is the distribution of underwriting surpluses to participants. If in one period the claim submitted is smaller than the available tabarru’ funds, the excess funds will be:
✔ Returned to participants who do not submit a claim.
✔ Stored in the tabarru’ account for future needs.
✔ Used to help other participants in emergency situations.
On the other hand, in conventional insurance, all profits from unclaimed premiums completely belong to the insurance company. Participants do not get benefits if they do not submit a claim during the policy period.
- Fund Ownership in Sharia and Conventional Insurance
Another fundamental difference lies in the ownership of premium funds.
🔹 In sharia insurance, the funds remain the property of the participant and are only managed by the company as a representative (mudharib representative). Participants have the right to excess funds if there are no claims.
🔹 In conventional insurance, the premiums paid directly become the property of the company. There is no refund mechanism if the participant does not submit a claim.
- Halal Transactions in Sharia Insurance
Conventional insurance often contains elements of riba (interest) because companies invest premium funds in instruments that contain interest. Apart from that, there is the potential for gharar (uncertainty) because participants do not know for sure how their funds are managed, as well as maysir (speculation) because there is an element of profit without real cooperation.
In contrast, in sharia insurance, all transactions are supervised by the Sharia Supervisory Board (DPS) to ensure that funds are managed in accordance with sharia. Funds are only invested in halal instruments, such as sukuk or sharia shares, and are free from elements of usury or speculation.
Which is More Suitable for You?
👉 Choose Sharia Insurance If:
✔ You want sharia-based protection with a mutual assistance system.
✔ You want to have transparency in fund management.
✔ You want to benefit from an underwriting surplus if there are no claims.
👉 Choose Conventional Insurance If:
✔ You prioritize flexibility without sharia considerations.
✔ You don’t mind a system of fund ownership that is completely in the hands of the insurance company.
✔ You focus more on the protection aspect than the fund management aspect.
How does the mutual assistance system (Tabarru’) work in sharia insurance?
One of the main differences between sharia insurance and conventional insurance is the fund management system. In sharia insurance, the main concept used is tabarru’, namely a system of mutual assistance between participants in facing risks. In contrast to conventional insurance which operates based on a risk buying and selling agreement, in sharia insurance there is no element of risk buying and selling, but rather sharing risks collectively for the common good.
- Basic Concept of Tabarru’ in Sharia Insurance
Tabarru’ comes from Arabic which means “voluntary giving without expecting anything in return”. In the context of sharia insurance, tabarru’ refers to participant contributions set aside into tabarru’ funds to help other participants who experience disaster.
How Does the Tabarru’ System Work?
- Each participant contributes a portion of their contribution to the tabarru’ fund. These funds are collected in one joint account and managed by the sharia insurance company.
- If one of the participants experiences a disaster, the claim will be paid from the tabarru’ fund.
- These funds are not owned by the insurance company, but remain the rights of the contributing participants.
- If there are no large claims in a period, the underwriting surplus will be returned to participants who do not submit claims.
- Underwriting surplus is the remaining unused tabarru’ funds after deducting claims payments and insurance company operational costs.
- Surplus distribution can be done in the form of contribution discounts for the next period or distributed in cash to participants.
- With this system, sharia insurance is fairer and more transparent, because participants still have the right to the funds they deposit.
- Claim Process in Sharia Insurance
When participants experience risks such as accidents or loss of vehicles, they can submit claims to sharia insurance companies. The claims process in sharia insurance is similar to conventional insurance, but with different principles.
Claim Steps in Sharia Insurance:
✅ Participants who experience a disaster submit a claim.
Participants must submit claims according to applicable procedures, such as completing claim documents and reporting incidents within the specified time.
✅ Tabarru’ funds are used to pay participant claims.
After the claim documents are verified, claim payments are made from the tabarru’ funds that have been collected by all participants.
✅ If there are no large claims within a certain period, the underwriting surplus is distributed back to the participants.
Participants who do not submit a claim are entitled to a return of the underwriting surplus according to the agreement.
This system ensures that participant funds are used efficiently and transparently, and not all of it becomes the insurance company’s profit.
- Advantages of the Tabarru’ System in Sharia Insurance
The tabarru’ system in sharia insurance has several advantages compared to conventional insurance systems:
- ✅ Stronger sense of solidarity between participants. In sharia insurance, participants help each other and share risks collectively. There is no business relationship between participants and insurance companies, but rather a social relationship based on mutual assistance.
- ✅ Transparent Funds, Not All Profits Are Taken by the Company. Tabarru’ funds remain the rights of the participants, while the insurance company only acts as manager. If tabarru’ funds still remain, the underwriting surplus will be returned to the participant, rather than becoming the company’s profit.
- ✅ There are no elements of usury, gharar and maysir. In conventional insurance, the premiums paid by participants become the property of the company, which is then invested to gain profits, often containing elements of riba (interest). In the tabarru’ system, there are no elements of usury, gharar (uncertainty), or maysir (speculation), because funds are managed according to sharia principles and supervised by the Sharia Supervisory Board (DPS).
- Practical Example of the Tabarru’ System in Sharia Car Insurance
As an illustration, the following is an example of how the tabarru’ system works in sharia car insurance:
➡ Mr Amir and Mr Budi registered their car with sharia car insurance.
➡ Every month, they deposit contributions into the tabarru’ fund, which is used to help other participants who experience disaster.
➡ One day, Mr. Amir’s car had an accident and required repairs of IDR 15 million.
➡ Mr. Amir submitted a claim, and after verification, the insurance company paid his claim from tabarru’ funds.
➡ On the other hand, Mr Budi did not have an accident or lose his vehicle during that period.
➡ If there are not many large claims in one year, the underwriting surplus will be returned to participants who do not submit claims, including Mr Budi.
From this example, it can be seen that sharia insurance provides more benefits for participants compared to conventional insurance which only benefits insurance companies.
Sharia Car Insurance Premium Estimates: How Much Does It Cost?
Choosing sharia car insurance is a smart step for vehicle owners who want to get optimal protection with the principles of being free from usury, gharar and maysir. However, before buying a policy, it is important to understand how much the premium will cost and the factors that influence its amount.
- Factors that Influence Sharia Insurance Premiums
Like conventional insurance, sharia vehicle insurance premiums are also influenced by the following factors:
✅ Vehicle Type (New or Used Car)
New cars generally have a higher market value, so the premiums are more expensive.
Used cars can get lower premiums, but it still depends on the age of the vehicle and engine condition.
✅ Protection Coverage (All Risk or TLO)
Sharia All Risk Insurance provides comprehensive protection against all forms of damage, so the premiums are more expensive.
Sharia Total Loss Only (TLO) insurance only protects the vehicle if it is totally damaged or lost due to theft, so the premium is lower.
✅ Vehicle Operational Location
If the vehicle is used in an area prone to accidents or theft, the premium will be higher.
For example, cars used in Jakarta or Surabaya have higher premiums compared to areas with lower risk.
✅ Previous Claim History
Drivers with a clean claims record (No Claim Bonus – NCB) can get cheaper premiums.
If you haven’t submitted a claim in several years, participants can get a discount
- How to Get the Best Premium?
There are several ways you can get cheaper sharia insurance premiums without reducing protection coverage:
✅ Take advantage of the No Claim Bonus (NCB) Discount
If you haven’t made a claim in several years, insurance companies usually give you a premium discount of up to 25%. This can be an effective way to reduce insurance costs without sacrificing protection.
✅ Use a Sharia Insurance Broker to Compare Offers
Using the services of a sharia insurance broker such as L&G Insurance Broker will help you get the best offers from various insurance companies. Brokers have access to many sharia insurance providers and can help you choose a policy that suits your needs and budget.
✅ Tailor Coverage to Needs
If the car is used daily, All Risk Sharia insurance is more suitable.
If the car is only used occasionally or is more than 5 years old, TLO Syariah could be a more economical choice.
The Importance of Using a Sharia Insurance Broker
In choosing sharia car insurance, many vehicle owners feel confused about determining the appropriate policy, comparing the best premiums, or understanding the claims process. This is where the role of sharia insurance brokers becomes very important.
As independent intermediaries, insurance brokers help customers choose the best policies from various insurance companies without favoring one particular provider. Compared to buying insurance directly from an insurance company, using a sharia insurance broker provides many benefits.
- Benefits of Using a Sharia Insurance Broker
Using a sharia insurance broker has a number of benefits, including:
✅ Help choose a policy that suits your needs and budget
Every vehicle owner has different needs. Some need comprehensive protection (All Risk Sharia), while others only need protection for major risks (TLO Syariah).
A broker will help you:
✔ Analyze your vehicle and financial needs.
✔ Adjusting insurance coverage to the risks faced.
✔ Choose a policy with premiums that suit your budget without sacrificing protection.
✅ Comparing Offers from Various Sharia Insurance Companies
Brokers have access to various leading sharia insurance companies. This allows them to compare premiums, benefits, and claims policies from different providers before recommending the best one for you.
Without a broker, vehicle owners must do their own research and potentially choose a policy that is inappropriate or too expensive. With a broker, you can get the best policy at a competitive price.
✅ Avoiding mistakes in policy selection that could harm participants
Many insurance participants end up buying policies that do not suit their needs, for example:
🚫 Buying TLO Syariah for a new car, even though All Risk is more recommended.
🚫 Not adding flood or riot protection riders, even though you live in a vulnerable area.
🚫 Not understanding the exceptions in the policy so the claim is rejected.
The broker will explain in detail the contents of the policy so that you do not experience losses due to incorrect policy selection.
- The Role of L&G Insurance Brokers in Sharia Car Insurance
As one of the most trusted insurance brokers in Indonesia, L&G Insurance Broker has an important role in helping vehicle owners get the best sharia car insurance.
✅ Providing Free Consultations to Understand Participants’ Needs
L&G Insurance Broker offers free consultation services for prospective insurance participants who want to understand more deeply about the types of sharia insurance protection.
🔹 What is the difference between All Risk Syariah and TLO Syariah?
🔹 What is the estimated premium for your vehicle?
🔹 What additional benefits (riders) can be taken?
The L&G Insurance Broker team will help answer all these questions so that participants truly understand the policy they choose.
✅ Helping the Claims Process Run More Quickly and Efficiently
One of the biggest problems in insurance is claims that are delayed or rejected due to incomplete documents or procedural errors.
L&G Insurance Broker has a team ready to help customers submit claims correctly, including:
✔ Ensure claim documents are complete.
✔ Helps communicate with insurance companies.
✔ Accompany participants until the claim is approved.
With the help of a broker, the claims process becomes faster and customers don’t need to worry about Conclusion and Call to Action
Sharia car insurance is not just vehicle protection, but is also a form of mutual assistance between participants (tabarru’) with a fund management system that is transparent and in accordance with Islamic principles. Compared to conventional insurance, the main differences in sharia insurance lie in:
✅ Fund ownership system → Funds remain the property of participants and are managed in a trustworthy manner.
✅ The contract used → Using a wakalah contract is a bill of ujrah or mudharabah, not risk buying and selling.
✅ Underwriting surplus → If there are no major claims, the excess funds are returned to the participant.
By choosing sharia vehicle insurance, you not only get optimal financial protection, but also avoid the elements of usury, gharar and maysir in your financial transactions.
Don’t just choose insurance! Make sure you get a policy that suits your needs, budget and sharia principles. To ensure you get the best protection, use the services of a sharia insurance broker who can help compare various offers from trusted sharia insurance companies.
Looking for insurance products? Don’t waste your time and contact us now
HOTLINE L&G 24 JAM: 0811-8507-773 (CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: oktoyar.meli@lngrisk.co.id
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