Ian Womersley, who serves on Hemsworth Town Council and Wakefield Council, admitted he is haunted by the incident, feels he is being forced to move house and says he feels like a child again, having to sleep with the lights on.
The 62-year-old read out a statement at Leeds Crown Court during the sentencing of Jordan Crompton.
Crompton was part of a gang who targeted the property in Hemsworth on the night of November 30 last year.
They threw a chunk of concrete through his front window then poured a flammable liquid over his Mercedes before setting it on fire.
Fighting back tears, Coun Womersley, who is a former kickboxer and has an MBE for his community work, said: "On the night of the incident, my life changed dramatically, I no longer feel safe.
"I have never met or spoken to these individuals, or know anything about them.
"When you lit that fire on that terrible night, your actions could have resulted in fatal consequences.
"The loss of my car does not bother me but the thought that we could have died in our sleep is breaking my heart.
"Every night, we do not sleep, or when we do, it's intermittently.
"We are terrified you will return as a result.
"I'm not afraid to admit your reckless and malicious actions have left me and my wife very frightened about what has happened, and more importantly, what could have been."
He ran downstairs and opened the backdoor and saw flames under the boot of the Mercedes, which was parked under a carport on the driveway.
He later told the emergency services that he thought fuel had been poured over the car and then set alight.
Coun Womersley rang 999 and also alerted his neighbours as the blaze spread to the carport.
He also noticed the front window of the house that had been smashed.
Fire crews were able to put the flames out, but the £13,000 Mercedes was written off.
There was £3,000 worth of damage to the carport and £300 worth of damage to the front window of the house.
Coun Womersley said he could not think of a reason why anyone would want to target his home, but said working as a local councillor he could often have disputes with people.
Police later found fingerprints on the house gate that matched Crompton's and he was arrested the next day.
A petrol canister was also recovered from his home.
Crompton said that he was contacted by another man, with whom he had done legitimate jobs with in the past for cash in hand, and had no idea where they were going that night or for what reason.
The two other males were never traced by police.
Crompton, 23, of Brierley in South Yorkshire, admitted a charge of arson being reckless to whether life was endangered.
He has 10 previous convictions for 17 offences, including robbery and violence.
Naakesha Michl, mitigating, said Crompton was coerced into attacking the property and believed it would have been a legal job in which he was being asked to get involved.
Judge Simon Phillips QC jailed Crompton for 32 months, and gave him an indefinite restraining order to keep him away from the victims.