A method for determining the presence of a leak in a water heater unit comprising a storage tank is presented. The present invention involves mounting one heating sensor on the lower half of the tank and another heating sensor on the upper half of the tank. Readings from both sensors are taken and compared to determine if the water heater tank has reached a steady state; if so, the cooling rate of the tank is determined. This cooling rate is compared to the historical natural cooling rate of the system, and based on the comparison a determination is made on the presence of a leak.
