Treehugger has a solid article on reducing hot water use with some good advice – including insulating one’s water heater. Which can be a very good action to help increase the heat retention of your water heater and cut down on standby losses, or the loss of heat when water is just sitting around, waiting for you to use it. HOWEVER. Before you add an insulation jacket to your water heater, make sure you read the label very carefully! Because you may void your warrenty by adding insulation to some water heaters. This is mostly an issue with newer water heaters which are built with sufficient insulation, but make sure you check all the same!
:: Treehugger

