I've never heard of such a thing. Perhaps people are confused about coverages.

Fire caused by a wreck would fall under collision coverage, just as the dents & dings caused by a wreck would.

Fire not caused by a wreck (struck by lightning, car parked in a garage that burned down, etc.) would fall under comprehensive coverage, just as damage due to a tree falling on a parked car would.

If you don't choose to purchase comprehensive coverage, then a fire not caused by a wreck would not be covered.

To my knowledge, no state requires a driver to have collision or comprehensive coverage -- bodily injury and property damage are the most commonly required coverages. In many states, personal injury protection and/or medical payments coverage is required.

If you owe money on a car loan, the lienholder almost certainly requires you to have collision and comprehensive coverage -- if the car is totaled, they want their money.

Disclaimer: All of the above comments are usually true, but they are generalities; you should check with your insurance provider if you want further clarification.