Just to amplify Mike's remarks:
Issues are fuel line: Make sure it is kept far away from both heat generators AND ignition wires, plugs and coil. I've mounted my coil on the driver's inner fender wall for that reason. Remember that the fuel line is usually high on these engines and gravity will want to pull it down to where the exhaust heat is. Don't let it.
Backfires (bad tune): of Special concern is popping UP through the carburetor, as it's spraying raw gas onto the inside of the air cleaner. If it coughs a few times and coughs up a fireball, well, you get the idea.
Fuel pump: Two things; a mechanical pump sits on top of the engine case. If it gets a pinhole in the pump diapraghm it can leak raw gas down into the crankcase with the potential to ignite. To prevent this, remove the mechanical fuel pump, put a cover over the hole and install a rotary fuel pump up under the gas tank in the front instead.
Leaking line on fuel pump: Just check to see that all connections are tight and leak-free and there are no pinholes along its' length.
Proper carb adjustment: In particular, make sure the floats are set at the correct height and pilot valves are not leaking, causing the bowls to overflow when the engine is turned off and run raw gas down into the cylinders - probably won't catch fire, but it's bad, just the same.
"Because of the excessive heat, fuel is an issue, fuel line going through the doghouse and the grommet is missing." also, if the fuel line goes through the engine firewall - it should have a good grommet there, too, and you should check where the hose goes through anything every Spring t make sure there is no abrasion there that might leak. Remember that the engine vibrates and moves around a lot when running and will wear anything attached both to it and something else stationary (like a firewall).
"And.... here's the kicker. Many (most) of the Aircooled motors in these cars have magnesium blocks. Once that catches fire, run, run away."
Mine's Aluminum, but either one will go up like a fireball.