Claim: A cigar aficionado insures his stogies against fire, then tries to collect from his insurance company after he smokes them.
Example:[Collected on the Internet, 1997]
A cigar smoker bought several hundred expensive stogies and had them insured against fire. After he'd smoked them all, he filed a claim, pointing out that the cigars had been destroyed by fire. The company refused to pay, and the man sued. A judge ruled that because the insurance company had agreed to insure against fire, it was legally responsible. So the company paid the claim. And when the man accepted the money, the company had him arrested for arson.
Origins: This legend began its Internet life after it was posted to the newsgroup alt.smokers.cigars in early 1996, and it has continued to circulate as a "true story" in newsgroups and e-mail ever since, despite its having been identified as an "urban legend" when it was first posted. The version posted was, in fact, nearly identical to one that has been circulating since at least the mid-1960s:
A man bought several boxes of cigars and had them insured against fire. When he had smoked them, he put in a claim against the insurance company that they had been destroyed by fire.
The company refused to pay, and the man sued. The judge ruled that the company had given the man a policy protecting against fire, and must pay.
As soon as the man accepted the money, the company had him arrested on a charge of arson.
Another anecdote from the same mid-1960s volume suggests this legend stems from a joke whose basic premise has been used in a few different ways:
"He's the kind of accountant you've got to admire. Last year he deducted eighty cartons of cigarettes from my income tax. Called it loss by fire!"
Sometimes the basic legend is given a darker ending:
A North Carolina man was on the top of the world, a self-proclaimed smart guy who made money by finding the loopholes in laws. He bought a $15,000 box of vintage imported cigars and took out an insurance policy, just like he did for his other valuables, protecting them against hazards, including fire. Once he finished smoking the two dozen cigars in the box, he filed an insurance claim, stating that the cigars had been "consumed" by fire.
The insurance company took him to court but was ordered to pay the man his claim because his policy did not specify the exact nature of fire it covered or excluded. The man jauntily stepped into the bank with his check. However, the moment he cashed it, he was arrested, charged, and convicted of twenty-four counts of arson — one for each cigar. Unable to find a loophole, he was sent to prison for two years, where he met his demise in an argument over a book of matches.
In 2003 the legend was made into a song and recorded by Brad Paisley.
As to whether there could be any truth to the legend's premise, insurance policies are generally written so that deliberate actions on the part of the policyholders cannot trigger payouts. Furthermore, destroying your own property isn't arson, as long as the act isn't intended to defraud anyone. If a court had already ruled that the insurance company was required to pay, then obviously no fraud was committed, and thus the burning could not be considered arson.
The structure of this legend — a person's exploiting a regulation for personal gain, then being punished under an unforeseen aspect of that regulation — is similar to the collegiate legend about cakes and ale.