My Kerrigan has rust around the screws in the water tank. Why? And what can I do?

Tank is rusted out:
Replace tank
http://waterheatertimer.org/Leaking-water-heater.html

Gene

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No.
Replace tank.
Buy 40 gallon from local Lowes and install yourself.
http://waterheatertimer.org/How-to-install-gas-water-heater.html

Under thin metal shell is a welded steel tank, surrounded by insulation and then covered with painted metal shell. The shell is what you look at.
The inside steel tank is made to withstand high pressure expansion that comes with heating water.
The steel tank has rusted out.
Turn gas control valve to vacation, so pilot light stays on, and then only heat enough water as needed until you can replace tank.

Prevent next tank from rusting by replacing anode rod, and ground water pipes.
http://waterheatertimer.org/How-to-maintain-water-heater.html

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You have a hole in the tank and needs to be replaced. Age eventually allows them to rust, water runs down inside the cover onto the floor or the pan. It will only get worse. Sorry. Check all plumbing first to see if dripping somewhere else. Then take small element covers off and see if you see water or rust around elements and thermostat. If plumbing is ok, then tank is leaking.

Copy following link for troubleshoot resources:
http://waterheatertimer.org/Leaking-water-heater.html

Replace rusted tank
http://waterheatertimer.org/How-to-install-gas-water-heater.html

Prevent rusted tank.
If nipples are leaking, and they did not leak before, then tank has most likely rusted out and needs replacement.
Cause for rusted tank is depleted anode rod.
Inspect and replace anode each 1-3 years.
http://waterheatertimer.org/Replace-anode-rod.html

If you need further help, I’m available over the phone at https://www.6ya.com/expert/gene_9f0ef4df2f9897e7

Copy following link for general troubleshoot:
Then add a comment and let's get the problem solved.
http://waterheatertimer.org/Leaking-water-heater.html

FYI:
Anode rod is either connected to hot-water nipple, or installed in separate port located top of tank. Anode stops water heater tank from rusting.
Dip tube is a plastic tube that is connected to cold water nipple and extends to bottom of tank so cold water always enters tank bottom.
TP valve is brass safety valve that is screwed into a port located on top of tank, or located on side of tank, and will release water when pressure or temperature exceed rating of TP.

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The warranty should not be void by using water softener, BUT read product manual.
http://waterheatertimer.org/Water-heater-manufacturers.html

1) First thing: Why is water heater leaking? Where is the leak?
http://waterheatertimer.org/Leaking-water-heater.html
For example, if you have electric water heater leaking from element, then replace element.
Replace leaking TP valve.
If water is leaking down vent pipe, and combustion chamber rusted out, then vent problem must be corrected.
These are not covered by warranty.
If tank is rusted out, then read below.

2) If water heater is rusted out after 4 years, you might have stray current corrosion.
This happens when hot and cold pipes are not connected together with a ground wire, and/or if cold water pipe is not grounded to earth.
This might not be covered by warranty.

3) Read water heater instruction manual for advisories.
Tanks rust out when anode rod is depleted. Softened water depletes anode rod faster.
Instruction manual says to check anode rod each year.
Checking anode rod is like checking oil on an engine. If oil was never checked and engine burned up, the manufacturer will not honor the warranty.
If anode rod is depleted, and tank is rusted out, the warranty might not cover the rusted tank since owner was supposed to check for anode depletion.

4) Anode rods can also be covered with calcium deposits and stop working.
This night not have anything to do with water softener, but anode stops working and tanks rusts out.
In any case the owner's manual probably says to check anode rod to prevent leaking from rusted tank
http://waterheatertimer.org/Replace-anode-rod.html

You can put hand on side of tank and feel for warm spot.
Tank is most likely rusted out and needs replacement.
If tank leak is welded, the rest of tank is still rusting and can rupture under pressure.

Open following links for troubleshoot walk-thru.
http://waterheatertimer.org/Leaking-water-heater.html
http://waterheatertimer.org/Emergency-steps-for-leaking-water-heater.html

AO Smith is biggest manufacturer and ships about 140,000 units per month sold under different brands. Look at rating on tank. Is it a 9 year tank? Or 6 year? Or lifetime?
http://waterheatertimer.org/Water-heater-manufacturers.html

Number of factors can cause rust around element:

1) Element is seeping moisture: check and replace element.
Elements can start leaking any time
http://waterheatertimer.org/Water-heater-is-leaking.html

2) Anode rod can be depleted from variety of factors including water softener or calcification over anode so it will not work: Check and replace anode rod every 1-2 years with water softener, every 3-5 without water softener. New anode rod will STOP the rust, but will not repair tank that is rusted.
Tanks with longer warranties have 2 anode rods, one on hot water nipple, the other on top of tank.
http://waterheatertimer.org/Replace-anode-rod.html

3) Stray current corrosion: add a jumper wire between hot and cold pipes, and make sure tank is grounded. If there is stray current, it will deplete steel in tank if tank is not grounded.
For example one fellow had a tank that rusted out every few years until he discovered his big radio antenna was grounded back to hot water pipe and the tank was not grounded, so the interference depleted his tank.
http://waterheatertimer.org/9-ways-to-save-with-water-heater.html#Ground-tank

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The exspansion tank is more than likly the problem. The temperature/presure valve may also be the problem. Replace both. To replace the exspansion tank turn off the supply water coming into the water heater. Open the relief valve and purge the presure off the tank. drain the water heater slightly below the temperarture/presure valve to replace. The exspansion tanks screws off. Use new teflon taope on the threads when replacing both the exspansion tank and the T&P valve. This work can be compleated by the homwowner with some mecanical inclination.