what i do to avoid this is to force the ships to fire not in a volley, but even then there is a chance, but i find mass-volleys give a huge chance of explosion in comparison.
so what i do is ill click the manual volley button so it goes red, then position ship and at same time, ill hold alt and right click the enemy ship, then ill push T twice, so itll take off the manual volley, and then ill keep adjusting ship so the side is on an angle, not perpendicular exactly with enemy ship or theyll jsut volley it, but if you slice in on a 50degree angle the shots go off 1-3 at a time and this just wears down the enemy slowly, reducing chances of them exploding.
a side effect of this is against lower, speedier ships they will likely surrender due to the sustained fire. also switching to grape half way thru when the speedy ship is nice and close, on an angle, almost guarantees the enemy will at least route and attempt to flee instead of fight.
still, the key to fires guys, especially those from an explosion because you notice them faster thank keycard info, is to turn auto fire off.
this releases men to do some firefighter work assuming theres enough men to spare.
id like to think this works with ships taking water but ive had zero luck so far,(possibly extended life of ship a few minutes but often not long enough to survive duration of battle) whereas fighting fires with autotargeting off i get a 70% success rate.
the 30% that dont work, are because the ship surrenders quite quickly after catching fire.
always amusing when your 1st rate admirals ship at the tip of the formation, catches fire in the first pass and surrenders quickly due to 3 ships firing at it at once