Water Heater Repair or Replace: How a Home Warranty Can Help

A broken water heater can throw off your entire routine. Cold showers when you least expect them, a mountain of dirty dishes, and an energy bill that just keeps climbing. It’s easy to panic, but before you rush to call the repairman or shell out for a new unit, you need to know your options.

How long do water heaters last? What signs should you be on the lookout for? And what’s the real cost of fixing or replacing it? In this guide, we’ll walk you through everything you need to know to make the best decision for your home and your wallet. Plus, we’ll show you how ARW Home’s home warranty plans can protect you from unexpected repair bills when things go wrong.

How Long Does a Water Heater Last?

No water heater is built to last forever. But knowing what to expect can help you figure out whether it’s time to repair or replace it.

For traditional tank heaters, you’re typically looking at a lifespan of 8 to 12 years. Tankless models, on the other hand, can go 15 to 20 years if they’re well-maintained. Even so, performance can start to dip long before the unit gives out completely.

If your water heater’s getting up there in age or you’ve had to call a technician more than once in the past year, it might be time to think about replacing it.

It’s also worth remembering that things like water quality, regular maintenance, and how well the unit was installed can all affect how long it lasts. For example, if you have hard water, you might notice more sediment buildup over time, which can wear your heater out faster.

Common Signs Your Water Heater Needs Attention

Even if you’re not sure whether it’s time to replace your water heater yet, there are clear warning signs that should grab your attention. Catching these early can help you avoid a full breakdown and save you from unexpected costs.

Here are a few things to keep an eye (or ear) out for:

• Leaking water: If you notice any water pooling around the base of your tank, it could indicate a failing internal component or corrosion. Small leaks may not seem like much, but they can cause water damage or even mold growth if ignored.
• Strange noises: Popping, rumbling, or gurgling sounds usually mean sediment buildup inside the tank. This reduces heating efficiency and puts extra strain on the system, leading to potential internal damage.
• Rusty or discolored water: Brown or orange water is unsightly, but it could also be a sign of rust or corrosion inside the tank. Rust can be a major warning that your unit is deteriorating.
• Inconsistent water temperature: Hot water one minute, cold the next? If you’re often running out of hot water or notice inconsistent temperatures, it could mean that the heating element or thermostat is malfunctioning. In older units, this is often a sign that the end is near.
• Higher utility bills: If your energy bills have been creeping up without any other explanation, your water heater could be working harder than it should. An older or inefficient unit may be consuming more energy to heat the same amount of water, which could be hitting your wallet harder.

If any of these signs sound familiar, it may be time to consider whether your water heater can be repaired or if it’s time for a replacement. Let’s take a closer look at how to make that decision.

Should I Repair or Replace My Water Heater?

When your water heater starts acting up, deciding whether to repair or replace it isn’t always straightforward. It’s an immediate issue. Here are some key things to consider to help you make the best choice:

• The 50% rule: If your repair cost is more than half the price of a new water heater, replacement is usually the better move. For example, if you’re looking at a $600 repair bill, but a new unit costs $1,100 to $1,300, replacing it makes more sense long-term.
• How old is your unit?: Water heaters have a limited lifespan. If your unit is nearing the end of its expected life, you might want to skip the repairs and invest in something newer and more efficient.
• Frequent repairs: One repair is manageable, but if you’re calling the technician more than once a year, that’s a red flag. Frequent repairs often mean your system is on its last legs, and continually fixing it could end up costing more than just replacing it altogether.
• Energy efficiency: If your utility bills have been creeping up, replacing your old water heater with a newer, more energy-efficient model could save you a lot of money in the long run. Plus, depending on where you live, you might even qualify for rebates or tax incentives.

Ultimately, the decision comes down to the long-term value. Sometimes a repair makes sense, but if your unit’s age or recurring problems are stacking up, a replacement might be the most cost-effective and stress-free choice.

Cost Comparison: Repair vs Replacement

Understanding the cost implications of repairing vs. replacing your water heater can help you avoid unnecessary expenses and make a more strategic decision, especially if your unit is aging or showing signs of decline.

Average Repair Costs of a Water Heater

On average, repairing a water heater costs around $603, with most homeowners spending between $222 and $986, depending on the issue. Here’s what some common repairs might cost:

• Heating element: $15–$70
• Anode rod: $25–$75
• Gas burner: Around $175
• Gas valve: $70–$200
• Thermostat: $20–$400
• Pilot light repair: $50–$150

If your water heater is relatively new and the issue is isolated, a single repair like one of these might be a cost-effective fix. But if repairs are becoming more frequent, or your unit is nearing the end of its lifespan. Those costs can start to add up quickly.

Replacement Costs (and What’s Often Overlooked)

Installing a new water heater typically costs between $700 and $2,700, depending on the type of system you choose (tank or tankless), size, energy efficiency, and local labor rates. But it’s important to factor in more than just the cost of the unit itself.

Additional expenses can include:

• New gas line installation: $262–$900 – Costs depend on your home’s layout and whether the existing gas infrastructure needs upgrades.
• Water line replacement or rerouting: $400–$2,000 – Especially if walls or floors must be opened to access plumbing.
• Electrical upgrades: $500–$1,000 – If switching from gas to electric, or installing a tankless system that needs more power.

While the upfront cost of replacement is higher, newer units tend to be far more energy-efficient, helping you save on monthly utility bills and reducing the likelihood of future repair costs.

Efficiency and Long-Term Savings for Water Heaters

While replacing a water heater comes with a higher upfront cost, it can lead to significant savings over time. Newer models—especially those that are ENERGY STAR® certified—are designed to be far more efficient than older units.

For example, an ENERGY STAR-certified tankless water heater can save you around $95 per year, or up to $1,800 over the unit’s lifetime compared to a standard gas model. Plus, modern systems experience fewer breakdowns, which means fewer repair bills and less hassle.

When you factor in lower energy consumption and reduced maintenance needs, the long-term savings often outweigh the cost of replacement, especially for units that are already near the end of their lifespan.

When Water Replacement Makes More Sense

Sometimes, the numbers speak for themselves. If your water heater is over 10 years old (for tank models) and you’re facing a repair bill of $500 or more, replacement is usually the smarter long-term move.

In many cases, older systems become less efficient and more prone to issues. Rather than repeatedly paying for repairs that only delay the inevitable, investing in a new unit can save you money (and peace of mind) down the line.

How a Home Warranty Can Help

When your water heater fails, the last thing you want to deal with is scrambling for a technician or absorbing the full cost of a surprise repair. That’s where a home warranty from ARW Home comes in.

Here’s how ARW Home helps take the pressure off:

Coverage You Can Count On

ARW Home offers warranty coverage for both traditional tank and tankless water heaters. If your system breaks down due to normal wear and tear, the warranty can cover the cost of repairs or replacement, including parts and labor.

Budget Protection

Water heater failures often strike at the worst times; like during cold weather or when guests are over. A home warranty helps you avoid unexpected out-of-pocket expenses that could otherwise run into the hundreds (or thousands) of dollars.

Fast, Reliable Service

No more last-minute online searches or phone calls to find help. With ARW Home, you just submit a claim 24/7, and a licensed technician is dispatched to diagnose and fix the issue: quickly and professionally.

Peace of Mind, All Year Round

When your home systems are protected, you don’t have to constantly worry about what might go wrong next. A home warranty gives you the freedom to focus on enjoying your home, not just maintaining it.

Water Heater Maintenance Tips to Extend Lifespan

Water heaters do a lot of heavy lifting in your home: hot showers, clean laundry, dishwashing, and more. With a bit of regular care, you can keep yours running efficiently and avoid costly breakdowns. Here’s how:

1. Flush the Tank Annually

Over time, sediment from your water supply builds up inside tank-style units, causing efficiency loss and internal strain. Flushing the tank once a year:

• Removes sediment that causes corrosion and noise
• Improves heating performance
• Extends the lifespan of the tank lining

You can do this yourself by draining several gallons from the tank via the drain valve or hire a plumber if you’re unsure.

2. Check and Replace the Anode Rod

The anode rod helps prevent your tank from rusting by corroding in its place (a process called sacrificial protection).

• Inspect it every 2–3 years
• Replace it when more than 6 inches of the core is exposed or it's coated in calcium

Spending $20–$50 on a new rod could save you from replacing a $1,000+ tank later on.

3. Set the Temperature to 120°F

Many heaters come set to 140°F by default, but that’s hotter than most homes need. Lowering the thermostat:

• Cuts energy use by up to 10%
• Reduces the risk of scalding
• Minimizes mineral buildup and wear on components

This applies to both tank and tankless systems.

4. Insulate Pipes and Tank (If Needed)

Insulation helps reduce heat loss and shortens the wait for hot water, especially in unheated spaces.

• Use foam sleeves on the first 3 feet of hot water pipe
• For older tanks, consider a fiberglass insulation jacket (check your owner’s manual first)

5. Watch for Warning Signs

Early signs of trouble can help you avoid major issues:

• Popping or rumbling noises → likely sediment buildup
• Rust-colored water → possible corrosion inside the tank
• Leaks or damp spots → can quickly lead to water damage
• Unexplained high utility bills → your heater may be working harder than it should

6. Schedule an Annual Professional Inspection

Even with DIY maintenance, a yearly checkup by a licensed plumber is a smart move. They’ll:

• Test pressure relief valves
• Check gas lines or electrical connections
• Look for hidden corrosion or leaks
• Assess overall system health

If you have a home warranty plan from ARW Home, you may be covered for diagnostics or repairs.

Repair or Replace? Quick Decision Guide 

Ready to Protect Your Water Heater—and Your Wallet?

A water heater breakdown can drain more than just your hot water. With an ARW Home warranty, you’ll be prepared for costly repairs or replacements without the financial stress.

Explore our home warranty plans to see how affordable peace of mind can be or contact us today for a personalized quote and start protecting your home’s most important systems

Frequently Asked Questions (FAQs)

How long does a water heater usually last?

The average water heater lifespan depends largely on the type of unit you have. Traditional tank water heaters typically last between 8 to 12 years, assuming regular maintenance like annual flushing. In contrast, tankless water heaters tend to last much longer; around 15 to 20 years, thanks to their on-demand operation and fewer moving parts. 

However, keep in mind that factors like water quality, daily usage, and upkeep can significantly influence how long your unit will actually perform reliably.

Is it worth repairing a 10-year-old water heater?

It might not be. 

By the time your water heater hits the 10-year mark, you may already notice signs of wear, like inconsistent heating, odd noises, or minor leaks. If the repair cost approaches 50% or more of a new unit, most professionals recommend replacement instead. 

This is especially true if the unit has had frequent problems or has become less energy-efficient over time. Investing in a new system may offer greater peace of mind, improved performance, and fewer service calls down the road.

Does a home warranty cover water heater replacement?

Yes, home warranty plans like those offered by ARW Home often include water heater coverage, which applies to both repairs and full replacements due to normal wear and tear. 

This coverage typically helps pay for diagnostic fees, labor, and parts if your water heater fails unexpectedly. If replacement is necessary, your warranty can substantially reduce out-of-pocket costs. 

Always check your specific plan’s terms and coverage limits, but in most cases, a home warranty provides a valuable safety net for essential appliances like your water heater.

Can I switch to a tankless system under warranty?

Most home warranties will replace a failing system with a comparable model, meaning if your current water heater is a traditional tank unit, the replacement covered by the warranty will also be a tank model. 

That said, you can still choose to upgrade to a tankless system, but you’ll likely need to pay the difference in cost. Additionally, modifications required for tankless installation—such as changes to gas lines, ventilation, or plumbing—are typically not covered under standard home warranty terms. 

Some warranty providers may allow you to apply the covered amount toward an upgrade, but you’ll want to verify those details with your provider first.