Just like insulating your walls or roof, insulating your electric water heater is an easy and inexpensive way to improve energy efficiency and save you money each month. If you have an older water heater, check to see if it has insulation with an R-value of at least 24. If you don’t know the R-value, touch the tank. Consider insulating your electric water heater if it’s warm to the touch. If not, consider insulating your water heater. Water heater insulation could reduce standby heat losses by 25%–45% and save you about 7%–16% in water heating costs—and should pay for itself in about a year. You can find pre-cut jackets or blankets available from around $20. Most experts agree that heat loss in a gas water heater goes up the flue. Therefore, a blanket accomplishes no purpose for these types of heaters.

Some local codes and utility company regulations may prohibit insulation blankets. Often, the homeowner has good intentions but unknowingly creates hazards by: 1) covering safety warnings and operating instructions; 2) covering controls, access areas, shut off devices, temperature and pressure relief valves, etc.; or 3) blocking air passages required for combustion or draft resulting in unsafe operation. Consequently, the water heater manufacturer disclaims any liability for problems associated with the use of insulation blankets.