The risk of gasoline vapors inside the engine compartment is indeed rare, but nevertheless a possibility and thus something marine engines need to be prepared for. How? Every part that poses a risk of creating a spark that could ignite those vapors needs to be "Spark Protected" or "Ignition Protected" and the standards by which such parts must be built and tested are set by the US Coast Guard. Here's the definition direct from the USCG:
"An electrical component that is “ignition protected” is capable of operating in an explosive environment without igniting that environment. “Ignition protection” of electrical devices is accomplished by the use of seals, flame arrestors and potting (sealing), or a combination of such means."
All parts that are built to these standards must be tested and approved by the USCG and receive a seal of approval, being routinely referred to as "marine grade" or "marine rated". Now, all engine manufacturers are obligated to use such parts, so buying a repower engine from them does not pose such risks. It is when you have "Joe the Mechanic" perform work on your engines, replace parts, or worse yet, sell you a "refreshed" or "rebuilt" engine that you run the very real risk of operating a component that routinely lets out sparks, which can ignite in the presence of fuel vapors. What happens afterwards is not to be described with funny words or tongue-in-cheek, for it could well be a tragic event.
But, to be clear, there are marine rated components and there are marine rated components. Given the extra expense involved in making them marine rated, many manufacturers opt for lower grade components to compensate for the expense. Best example is with alternators, which even if marine grade, cannot do much charging anytime they are 65 AMP or less. At Medusa, we use 120-160 AMP marine grade alternators. And we only buy the highest quality available in every other ignition protected component. Our starters are rated for much bigger engines, our fuel pumps are rated for double the flow our engines need and our ignition components are not only sealed but also potted and built from billet blocks. Because adhering to a standard is the law, but surpassing it is how we show we really care.