Can you insure your cigars against fire?

You probably got already this email more than once, and the story still sounds cool and intriguing to you. But can this story be true?

FW: Subject: Our wonderful legal system

A Charlotte, North Carolina man, having purchased a case of rare, very expensive cigars, insured them against (get this) fire! Within a month, having smoked his entire stockpile of fabulous cigars, and having yet to make a single premium payment on the policy, the man filed a claim against the insurance company.

In his claim, the man stated that he had lost the cigars "in a series of small fires." The insurance company refused to pay, citing the obvious reason that the man had consumed the cigars in a normal fashion. The man sued -- and won! In delivering his ruling, the judge stated that since the man held a policy from the company in which it had warranted that the cigars were insurable and also guaranteed that the cigars would be insured against fire, without defining what it considered to be unacceptable fire, it was obligated to compensate the insured for his loss.

Rather than endure a lengthy and costly appeal process, the insurance company grudgingly accepted the judge's ruling and paid the man $15,000 for the rare cigars he lost in the fires. After the man cashed his check, however, the insurance company had him arrested on 24 counts of arson. With his own insurance claim and testimony from the previous case being used as evidence against him, the man was convicted of intentionally burning the rare cigars and sentenced to 24 consecutive one-year terms.

So don't piss off your insurance company!

True or False?

This story is decades old and likely originated as a joke. A much briefer version appeared in a 1965 toastmaster's manual and was apparently the direct inspiration of the earliest Internet variant, posted in a Usenet discussion in February 1996:

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.

Another anecdote from 60^th also suggests that the story has originated as a joke:

He is a 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!

While most of the sources (and I tend to lean to their version) consider the story as having no factual background, I have found also reference to the real case. It is claimed that the story (at least, its beginning) is true, and the man who insured his cigars was Jason P. Mountebank, who lived in New York City at the time. The incident in question took place in the winter of 1960-1961. The policy did not cover a collection, but only gross of cigars of a particularly rare Cuban vintage, and valued at over $100 apiece. Moutnebank collected some $14,400 from the insurance company -- a fair amount of money in the early 1960s.

The tail end of the legend -- about additional policies being canceled -- is played for laughs (albeit weak ones) and has no basis in fact. A few years after the incident, however, Mountebank purchased a large Montana lemming farm and had its residents insured against suicide with results I'm sure you can puzzle out for yourself.

Summary

It seems highly unlikely that even the earliest version of the story was based on a real case. Even in the 1960's, it seems quite doubtful that an insurance policy would have been so poorly worded that the act of smoking a cigar in the normal way would have been considered by a court as a claimable fire. Moreover, the fact that the court ordered the insurance company to pay up means that the court did not find that the cigar smoker had committed a fraudulent act - no insurance company would be forced to pay if the claimant's actions had been deemed fraudulent. Therefore, the smoker could hardly be charged for arson for simply smoking his cigars in the intended manner.

Cigar Song

To give an old anecdotal story a new life, Brad Paisley converted it into The Cigar Song lyrics.

Well I'm a sucker for fine Cuban cigars
The problem is I can't afford 'em
But last year I went and got myself a whole box
And just to be safe I insured 'em

Chorus
I took out a policy against fire and theft
And then I on hurried home
With a fifty-cent lighter I sat on my back steps
And I smoked 'em one by one

Two weeks later I went to see that insurance man
And I handed in my claim
With a straight face I told him that through a series of small fires
They'd all gone up in flames

2nd Chorus
They reviewed my case and they had no choice
But to pay me for what I'd done
And I took that check and bought a whole new box
And I smoked 'em one by one

Two weeks later this detective shows up
Tells me that company's pressin' charges
One speedy trial later they locked me up
On twenty-four separate counts of arson

3rd Chorus
And now I sit and stare at a blank brick wall
Lookin' back on what I've done
To pass the time I've got some ten-cent cigars
And I smoke 'em one by one
Yeah, I smoke 'em one by one.