What this is
Gas water heaters use a flame under the tank to create heat.
Electric water heaters use a heating element to warm the water.
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The water enters the tank coming from the main water supply.
The heating burner/element underneath the tank heats the water.
Hot water rises to the top of the tank.
When hot water is demanded from the exits, it takes the hot water from the top of the tank.
What are the most common signs of a damaged water?
Rust on the tank
Noises when the unit is on
Water in the collection pan under the tank
Rust in your hot water