The boy, who was nine at the time, was visiting another family in the suburb in southern Stockholm when he got hold of a cigarette lighter and proceeded to set light to some paper in a wardrobe with devastating consequences.
The insurance company agreed to meet the costs incurred by the family for the damages to their home - 1.9 million kronor - and then proceeded to sue the boy in court.
The court has now ruled that the boy is responsible for his actions - the debt can not be claimed from the other members of his family.
"According to Swedish law children can be liable for damages to the same extent as adults," said Mårten Schultz, an expert in liability law, told the newspaper.
"The debt is the child's, it is the boy that has to pay up," he confirmed.
While Schultz explained that Swedish law supported the decision he said that he had never heard of someone so young being ordered to pay such a high sum. The figure is usually significantly reduced.