I remember several years ago when every other week there was a news story about a phone that caught fire in someone's pocket or purse, or on an airliner.
Substandard batteries were the issue. Around that time, the DOT and the airlines were banning certain models of Samsung cellphones from being brought on airliners due to the spontaneous fires. That could have been related to the in-seat chargers in use at the time...that is a guess, but as a result, air freight shipments of consumer lithium batteries is highly restricted now.
I had two of my older cellphones develop swelling in the battery pack, ruining the phone as it pushed the front half and back half apart. They didn't catch on fire but they could have if the conditions had been different.
Then there was the hoverboard fiasco. Hundreds, maybe thousands, of hoverboards were catching fire, some actually exploded. And the lithium batteries catching fire in the Boeing 787s...now THAT was getting serious!
Then the Chevy Bolt EV recall...Bolts were catching fire and GM dealt with it temporarily by asking owners to not park the car in a garage or near any other vehicles!
For a time during the early years of consumer drones as they matured and got larger and larger, some of the manufacturers were beginning to offer 'battery bags'...a fireproof case that you could use to store your fully charged lithium drone battery in case it caught fire in your back seat on the way to the flying field or video shoot.
The trouble with most lithium batteries is that when damaged due to impact or overcharge, they begin to heat up and the chemicals involved contain oxygen, so the spontaneous fire has its own oxygen supply, meaning you cant put out the fire with water.
I would not call the event extremely rare...I would say 'unlikely' in most normal day to day use.
Luckily, I've only had ONE lithium battery catch fire myself, and that was a deliberate event: I drove a nail thru a cheap aftermarket drone battery and sure enough, it caught fire!
Kinda like gasoline stored in a gas can.....if one takes precautions, uses common sense, and has at least a normal amount of good luck, most people will never have a problem.