Question:
Is it permissible to reclaim PPI (Payment Protection Insurance)?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
The Answer:
It is permissible to reclaim mis-sold Payment Protection Insurance (PPI) up to the amount one has paid to the insurance company in the form of premiums.
The Fiqh (jurisprudence of the Answer):
Conventional insurance contracts are irregular and voidable (fāsid) contracts. The ruling of voidable contracts is that they must be nullified if possible[1]. Thus, besides mandatory conventional insurance contracts and permitted insurance contracts based on necessity, the remaining insurance contracts should be nullified.
Reclaiming PPI will be a means of cancelling your contract[2]. One cannot take more than the amount paid as the excess will be a form of interest.
And Allah Ta’ālā Alone Knows Best
Mufti Faraz Adam
www.darulfiqh.com
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