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

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. Also Takaful companies are fully Sharia’a compliant and Takaful products and operations are supervised by a Sharia’a Board.

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

• The Company: Representing the participant’s fund .
• The Takaful participant: Who wishes to have cover against risk of suffering a financial loss resulting from fire, accidents, burglary, etc.

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.

It is the maximum liability of a Takaful company towards a physical property.

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

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 insured, otherwise his indemnity will be reduced proportionately.

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.

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.

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.

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.

The contribution is calculated based on the hazards associated with the risk under question, In Property and Motor Takaful it is a percentage of the Takaful amount (Sum Insured). The percentage will vary (+or-) depending on the hazards.

• 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.