The literal meaning of 'kufr' is 'to conceal' or 'to hide'. It also means 'disobedience' or 'thanklessness'. Shia’s grand jurisprudents have said that one who denies the oneness of God or associates anyone with Him is a kafir (disbeliever). There are other meanings and instances for kufr (disbelief) which have been mentioned in the treatises written by Muslim scholars and which we do not mention here for the sake of brevity.
As for the impurity of a kafir, Muslim scholars rely on the Quranic verse which says, “Verily, the pagans are impure…”. Shia jurisprudents are almost unanimous about the impurity and uncleanness of disbelievers. However, when it comes to the People of the Book (Christians and Jews), they hold diverse views; some say that they are ritually and essentially pure. That is to say, if we know that they do not have any physical contact with impure things and have not used them either, then they are not impure.
In any rate, if it is said that this ruling or injunction is an insult to them, it should be said that, first of all, the reason behind Islam’s injunction about the disbelievers’ impurity could be considered as ‘politically motivated’. Thus, we can say that the purpose behind this injunction is to prevent Muslims from associating with them so that Muslims may not be influenced by their destructive thoughts. Secondly, this is a kind of punishment or penalty and it is evidently very much likely that the person who is subjected to such punishment may consider it as an insult to himself but he himself is the cause of this insult not the legislator who for underlying reasons enacted the law.
In order to give an appropriate answer to the question, it is necessary to make mention of the following points in the first place:
First, the literal meaning of “Kufr” and its various manifestations: According to etymologists, the term “kufr” has one general meaning which is ‘to conceal’ or ‘hide’. The other meanings for this term are in fact manifestations of the same general meaning as in the following examples:
A) “Kufr” versus “iman” (belief) which means to conceal and deny the truths such as God, resurrection, prophethood of the prophets etc.
B) Kufr meaning 'thanklessness' and 'disobedience' versus gratefulness and thanksgiving. Thus, in this sense, a kafir is one who ignores or disregards God’s bounties.
Shia jurisprudents have used the term “kufr” in as many as at least five meanings. On the whole there are seven categories of people who, based on the diverse verdicts of Muslims scholars, have been considered as kafir (disbeliever):
1. Deniers of God.
2. The pagans (i.e. those who ascribes partners to Allah).
3. The followers of other divine religions such as the People of the Book (It should be noted that there is a difference of opinion in this connection as shall be mentioned later on.)
4. Those who deny the essentials (necessary rules) of the religion with consciousness and knowledge
5. Those who do not accept the prophethood of Prophet Muhammad bin Abdullah (s).
6. The enemies of the infallible Imams (a.s) such Kharijites and Nasibis.
7. The Ghulat or Ghalis (those who consider one of the Imams as god, or believe in the incarnation of God in one of them).
Second, the impurity of disbelievers: In regards to the impurity of a kafir, the scholars have relied on the Quranic verse which says:
«انما المشرکون نجس فلا یقربوا المسجدالحرام بعد عامهم هذا ...»
“O you who believe! the idolaters are nothing but unclean, so they shall not approach the Sacred Mosque after this year.”
The above verse was revealed in the ninth hegira year after God, the Almighty, forbade Muslims from surrendering themselves to the guardianship of the pagans and polytheists. The verse says:
“O you who believe! do not take your fathers and your brothers for guardians if they love unbelief more than belief; and whoever of you takes them for a guardian, these it is that are the unjust.”
It was in the same year when the guardianship of the idolaters and polytheists over Masjid al-Haram (the Grand Mosque) came to an end and they were denied entrance in it. In the same year, the Commander of the Faithful, Ali (a.s.) declared disavowal from the deeds of the idolaters and pagans and said: “From this year onward, no pagan has the right to perform Hajj.”
Hence, therefore, the verse “the pagans are impure” proves a kind of impurity for the pagans disqualifying them from entering Masjid al-Haram.
Third, the meaning of the term ‘najis’: Different meanings have been mentioned for the term ‘najis’. We will mention some of the most famous of them:
The word ‘najis’ according to etymologists means unclean, dirty, polluted and impure.
Raghib Isfahani writes: ‘Nijasah is the uncleanness and impurity which is of two kinds:
1. One kind of impurity is observable.
2. The second is not observable with the senses.
God has described the pagans as impure in the second meaning. He, the Glorified, says: “O you who believe! the pagans are nothing but unclean.”
Fourth, the meaning of ‘najis’ in the Quranic verse:
Some Shia jurists and also most of the of the Sunni exegetes have said in their interpretation of the word ‘najis’ under the aforementioned verse that the nijasah of the disbelievers signifies their spiritual and inner wickedness, impurity and uncleanness because their polytheistic beliefs and practices as well as their enmity and grudge against the Messenger of Allah (s) and other prophets have tainted their thoughts, emotions, sentiments and psyche to the extent that they have become unworthy of entering Masjid al-Haram which is the house of monotheism and worship of the One God.
Additionally, there are proofs and evidence which well indicate that the meaning of ‘najis’ in the above verse is ‘inner uncleanness” and “ideological and psychological impurity”. We shall mention two instances here:
A) The prohibition concerning the pagans and idolaters entering the Grand Mosque (Masjid al-Haram) and the impurity taken as criterion for the prohibition is an evidence signifying the psychological or spiritual uncleanness not physical impurity because if we take uncleanness for its jurisprudential meaning, then we have inevitably considered it as the cause of prohibition whereas such an opinion is discarded by Shia scholars. That is because, according to most of the jurisprudents, it is permissible for an outwardly impure person to enter Masjid al-Haram or carry a najis object into the Mosque or any other mosque except for when he may cause impurity to transfer to the mosque in which case it is forbidden for him to enter the mosque. Therefore, in this case the prohibition of entering the mosque is due to the prohibition of ‘tanjis’ (making the mosque impure).
In addition, one who is not allowed to enter Masjid al-Haram is he who is in the state of greater impurity (hadath akbar) e.g. janabah, haydh etc. Those Muslims who are in the state of Janabah or haydh are not allowed to enter the Mosque nor are they allowed to stay therein. This criterion of prohibition (ritual impurity) of entering the Mosque is quite different from what has been alleged (i.e. jurisprudential and external nijasah).
Late Ayatollah Khoei takes the concept of inner uncleanness for the literal and conventional meaning of the word ‘najis’ and he takes the concept of jurisprudential impurity for the unconventional and non-literal meaning of impurity. For this reason, he has preferred the first meaning of the second meaning.
Fifth, the People of the Book (Jews and Christians):
Shia jurisprudents are almost unanimous about the impurity and uncleanness of the disbelievers. However, when it comes to the People of the Book (Christians and Jews), they have diverse opinions. Some say that they are ritually and essentially pure. That is to say, if we know that they do not have any physical contact with impure things and have not used them either, then they are not najis. They say that ‘najis’ does not apply exclusively to the pagans and idolaters. The [aforementioned] verse does not seek to consider the People of the Book as polytheists because there are different levels of shirk (polytheists) and the highest level of shirk is to believe in many deities and gods. This concept of polytheism is the subject of impurity.
The jurists have also turned to other arguments to prove the purity of the People of the Book, and interested readers can refer to the relevant sources to read those arguments for themselves. Therefore, the ruling concerning the impurity of the disbelievers apply to pagans only, not the People of the Book.
In any rate, some of the contemporary jurisprudents have preferred those narrations which imply the essential purity of the People of the Book over other narrations. They have said that the purported consensus about the impurity of the People of the Book is ambiguous as it is unclear whether the scholars mean essential impurity or accidental impurity. Therefore, the consensus [ijma'] cannot serve as a strong reason whereby the essential impurity of the People of the Book may be proved.
Some of the contemporary grand jurists such as grand Ayatollah Fazel Lankarani, grand Ayatollah Khamenei and grand Ayatollah Sistani hold that the People of Book are pure. They say: "Ahl-e Kitab are treated as essentially pure."
For further information in this regard, see: question 2215, Index: Impurity of Disbelievers and Ahl-e Kitab
As for whether or not considering the disbelievers impure is an insult to their personality and sentiments, it is necessary to take two points into consideration before we can give an answer to the same inquiry:
A) There are rules and regulations in every faith, religion, denomination, government and society and also rewards and punishments that serve as support and sanction for those rules which seem to be necessary and in the absence of which chaos will prevail in the society.
B) Wherever there is punishment for the culprit or offender, the punishment is definitely in the best interest of society and people not the offender. For example, when a person offends the rule of society and creates disturbance and chaos, he is arrested and sent to jail for the society's interest. Although this action is considered to be insult to his sentiments, personality, freedom and free will, no sane individual objects to bringing a culprit to justice.
Keeping the above two points into consideration, we shall now say:
1. Although the ruling concerning the impurity of the disbelievers refers to the uncleanness of their thought, soul and psyche, it implies that Muslims should cut off some of their relations with the non-Muslims lest they should not be influenced by their thoughts, mores and morals. What matters to Islam is Muslims' independence that may be affected as a result of Muslims getting mixed with non-Muslims. In other words, there is a political motive behind the ruling regarding the impurity of the disbelievers. Thus, we can say that the purpose behind this injunction is to prevent Muslims from associating with them so that Muslims may not be influenced by their destructive thoughts.
2. This injunction is a kind of punishment because disbelieving in God and in divine laws is a great and punishable crime according to Islam. The same is true with those who perpetrate greater sins such as drinking wine, robbery, tyranny, taking usury and the likes of such sins. There are limitations and restrictions for them in Islamic laws. For example, their testimony is not accepted and they are denied access to certain posts which require the quality of justice. Although the ruling regarding the impurity of the disbelievers seems to be insulting to them, it is not in any way opposed to their freedom. As explained in Islamic jurisprudence, this law is quite logical and wise and it is considered a kind of punishment considered for them.
 - Isfahani, Raghib, Al-Mufradat fi Gharib al-Qur’an, pg. 433, Murtazaviyah Library; Lisan al-Arab, Ibn Manzur, vol.5, pg. 144, Adab al-Hawzah Publications.
 - Resalah Tawzih al-Masail of nine Maraje’, prepared by Rashidi, Latif and Rashidi, Sa’eid, pg. 71 – 73, Payam Adalat Publications, 1st edition, 1385 (2006).
 - Al-Tawbah, 28
 - Al-Tawbah, 23
 -Tabarsi, Abu Ali al-Fazl bin Al-Hasan, Majma’ul Bayan, vol.5, pg. 20, annotated by Sha’rani, Abul Hasan, 2nd edition, Tehran, 1380 (2001).
 - Turaihi, Majma’ul Bayan, vol.4, pg. 11; Firuz Abadi, Muhammad bin Ya’qub, Al-Qamus al-Mohit, vol.2, pg. 253, Beirut, Dar Ihya Turath al-Arabi.
 - Like number 1, letter “N”.
 - Zamani, Muhammad Hasan, Taharat wa Nijasat Ahl-e Kitab dar Fiqh Islami, Islamic Research and Studies Center and Hawza Website (search impurity of the People of the Book).
 - Ibid.
 - Tabatabai Yazdi, Sayyid Muhammad Kazem, Al-Urwah al-Wuthqa, vol.1, pg. 598, Qom, Ismailiyan Institute.
 - Ibid, pg. 285, Imam Khomeini, Tahrir al-Wasilah, vol.1, pg. 380, Qom, Islamic Publications Institute.
 - Khoei, Sayyid Abul Qasim, Durus fi Fiqh al-Shi’ah, vol.3, pg. 78, Qom, Dar al-Hadi Publications.
 - Tawzih al-Masail Maraje’, vol.1, pg. 76 and 77.
 - Rohani, Sayyid Sadiq, Fiqh al-Sadiq, vol.3, pg. 286, and 287, [excerpted from “Mawsu’at al-Imam al-Rohani” software].
 - Hakim Tabatabai, Sayyid Mohsen, Mustamsak al-Urwatul Wuthqa, vol.1, pg. 367 – 369, Qom, Ayatollah Marashi Najafi Library, 1404 A.H.
 - Ajwebat al-Istifta'at, vol.1, pg. 324, pg. 92, Thaqalayn Cultural Institute, 2nd edition, 1375; Resalah Tawzih al-Masail, Sistani, Sayyid Ali, issue No.103, pg. 31, Mashad Hatif Publication, 1385 (2006).
 - Saafi Gulpaigani, Lotfullah, Towards the Creator, pg. 143, Islamic Publications Office affiliated to the Society of Teachers of the Islamic Seminary of Qm, 3rd edition, 1377 (1998).
 - Ibid.