This is the primary hazard with distilling, mostly because you are working with a highly flammable compound while being surrounded by hot surfaces, possibly open flames, electrical equipment and static electricity. This makes for a volatile mixture.
Step 1: When preparing to distill, make sure you have a space that is suitable. If you are just getting started never practice distilling inside a house or worse an apartment building.
Step 2: Known how to use a fire extinguisher. You would be surprised at how many people own one but have never used one. When there is a blazing fire in front of you, that is not the time to learn how to use the fire extinguisher and under that type of pressure, most people fail. Build a fire outside, take a fire extinguisher and put it out, then get your extinguisher recharged.
Wear cotton or natural fabrics, not synthetics. Denim offers decent protection from a flash-over but any synthetic, like polyester blends, will melt into your skin, which is painful, but getting the melted material removed from your body is extra painful. Cotton or even flame retardant clothing (Nomex) are better options.
When working with flammable liquids, there is always a risk of an explosion because of the vapours. There are three things needed for an explosion: fuel, oxygen and an ignition source. This will typically happen in the building if there is a leak in the still and there isn’t proper ventilation. Once the proper air to fuel mixture is sparked you will get an explosion, and it does happen.
Ethanol does not have the same heat capacity as water, if you are using an electric element in your boiler any distillate over 40% can be problematic because most heating elements were designed for water, not ethanol. Because the ethanol doesn’t remove heat away from the surface of the heating element as fast as water, the element can overheat and fail.
The surface temperature of heating elements without cooling can be above the auto-ignition temperature of ethanol, so it is imperative that there is no accidental way to turn on the heating element when it is not fully covered with a liquid. If there are sufficient ethanol vapours, this can lead to a flash-over or an explosion.
Whenever you are dealing with high proof spirits, make sure everything is properly ground to avoid static buildup and potentially causing a spark that could ignite the ethanol vapours. This is more of an issue on dry winter days, but you should always use grounding straps/cables when transferring ethanol between two things (tanks, buckets, still, etc) in the open air. That simple static discharge is enough to cause ethanol to ignite under the right conditions.
Blending water based mixtures, like grains and water or molasses and water, is fine but do not be tempted to mix any high proof spirit with an electric drill. Standard power tools are not explosion proof and alcohol vapours can be exposed to electric discharge in the drill motor (brushes).