Chimney fires, lightning strikes, earthquakes, fallen trees, very high winds, and other traumas can damage the liner, masonry, or chimney structure.
Wood, coal, and to a lesser degree oil fires combust fuel incompletely. The resulting smoke exits the chimney with unburned particulates in suspension. As the smoke rises it cools, condensation occurs, and the particulates are deposited inside the flue as soot or creosote. Soot from oil appliances and creosote from wood and coal appliances are the chief culprits in chimney fires. Under the right conditions these deposits will ignite, sometimes explosively, and burn at very hot temperatures.
Terra-cotta tile liners will withstand large amounts of heat, but not a rapid rise in temperature. If the rise is severe enough the liner can crack and in some cases develop holes. Even when the fire is contained, the damaged liner needs to be repaired or replaced so fire protection and proper function are maintained.