Shaikh Ibn ul-Uthaymeen rahimahullah said:

“I am cautious/weary of the permissibility of this warranty because in reality it is necessary to go above the price of the phone [in repairs/replacement thorough the warranty]. Next, in this time period will the phone break once, twice,thrice? We do not know. So here the contract wavers between benefiting or losing. The principle in the legislation is: that all the contracts that waver between lose and benefit is from prohibited gambling”.

[Fataawa al-Haram 1418 no. 3 side B]

Translated by

Faisal Ibn Abdul Qaadir Ibn Hassan
Abu Sulaymaan


As an additional benefit and note:

If the warranty offered is that which the manufacturer has taken upon themselves to provide for their customers as an extra service (which is included in the original price when purchasing the product, regardless whether it is requested or not), then there is no sin upon the person in making use of such warranties.

As for paying an additional fee for an extended warranty (i.e. a service contract) for the likes of a car or a laptop, then this is impermissible upon the verdicts of the scholars. This is since it takes the ruling of commercial insurance. Rather, it is a kind of gambling and unjust consumption of the wealth of the people. Bear in mind that many of these warranties comprise of scams and a lack of reliability.

The Lajnah (Permanent Committee For Scholarly Research And Ifta’) mentioned:

[…] commercial insurance is Haram, because of the following:

  1. Commercial insurance is a contract of presumed financial compensation which involves clear uncertainty, because the insurer cannot know at the time of signing the contract the amount which they will pay or be given. They may pay one installment or two and then an accident takes place, qualifying them to take what the insurance company has been committed to pay. On the other hand, no accident may take place and thus the insurer pays all the installments and takes nothing. In addition, the insurance company cannot determine the amount it might give or take according to each contract it signs. It is stated in an authentic Hadith that the Prophet (peace be upon him) prohibited the Gharar sale (fraudulent transaction where details about the sold item are unknown or uncertain).
  2. Commercial insurance is a type of gambling, because it involves risk in financial compensation, loss without any reason, and gain without exerting any effort. For example, the insurer can pay one installment then have an accident, thus causing the insurance company to pay all the insurance money. Conversely, no accident might take place and the insurer will pay all the installments without a return. These uncertain contracts are gambling and the general evidence prohibiting gambling are thus applicable to them. Allah (Exalted be He) says, O you who believe! Intoxicants (all kinds of alcoholic drinks), and gambling, and Al-Ansâb, and Al-Azlâm (arrows for seeking luck or decision) are an abomination of Shaitan’s (Satan) handiwork. So avoid (strictly all) that (abomination) in order that you may be successful. 
  3. Commercial insurance involves Riba Al-Fadl (usury of excess, selling an item for another of the same type, on the spot, but in excess) and Riba Al-Nasi’ah (usury of delay, conditional excess for delay of payment). If the insurance company pays the insurer, their heirs, or the beneficiary more than the money they paid, then this is Riba Al-Fadl. If the insurance company pays this sum of money to the insurer after the term of the contract, then this is Riba Al-Nasi’ah. If the insurance company pays to the insurer the same amount the latter paid to it, then this is Riba Al-Nasi’ah. Both kinds of Riba are prohibited according to Nas (Islamic text from the Qur’an or the Sunnah) and Ijma`.
  4. Commercial insurance is a type of prohibited wager, because both of them include uncertainty and gambling. Shari`ah has only permitted wagers that can support Islam through evidence and strength. The Prophet (peace be upon him) restricted the permissibility of wagers to three things, by saying, Wagers are allowed only for racing camels or horses or shooting arrows.
    Insurance is not one of these types of wagers or even like any of them; that is why it is prohibited.
  5. Commercial insurance involves taking others’ money unjustly, which is prohibited in commercial compensation contracts because of being included in the general prohibition specified in the following Ayah (Qur’anic verse), O you who believe! Eat not up your property among yourselves unjustly except it be a trade amongst you, by mutual consent.
  6. Commercial insurance is a commitment to do something that is not legally obligatory. The insurance company is not responsible for the accident; it only makes a contract with the insurer to protect them against accidents, in case they take place, in return for a sum of money which the insurer pays to the insurance company and the latter does nothing for the insurer to deserve this money. Hence, commercial insurance is Haram. We hope that what we have said is useful for the inquirer. May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.

[Reference]

Mentioned by

AbdulFattaah Bin Uthman
Abu Fajr