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Yes, there is also the problem that an under-torqued connection will have less than engineered contact area. The same thing happens if over-torqued with the additional possibility or arcing. If the latter, the best practice is to snip off the ends and start fresh.
Correct torque is really, really, really important.
here's what happens when you don't torque properly.
Note - this was 100% my fault - I installed it with Polaris connectors that were rated for the proper current but they had a hex bolt. I only had an Allen wrench so I tightened as much as I could, planning on going back to check later on but forgot until this discussion. The connections had loosened, exactly as @SageBrush described, increasing the resistance and generating enough heat to cause the insulation to melt.