Installing an insulating blanket is a good idea if your water heater's storage tank has a low insulating R-value (i.e., less that R-24). If you don't know your water heater tank's R-value, touch it. A tank that's warm to the touch needs additional insulation. Adding an insulating blanket to your water heater can reduce standby heat losses by 25% - 45% and save you around 4% - 9% in water heating costs. Insulating your water heater tank is simple and inexpensive. Choose a blanket with an insulating value of at least R-8. Learn more about insulating your water heater tank.