If you are planning on replacing your water heater you are most likely going to be required to pull a permit to complete the project. While every city or jurisdiction will have their own rules that you must comply with, I have never heard of a city that did not require a permit for a water heater.
One of the most important reasons for pulling a permit with the installation of a new water heater is to ensure that all of the mechanical components are up to specs for the new unit. As a licensed plumber, I have seen many homes that require various modifications to the incoming gas line. Unless you are familiar with local plumbing code and own a pipe threader, it is usually best to have a licensed plumber complete this type of modification.
Another common problem we see when replacing water heaters is improper connections of the flue. If a unit is not vented properly, carbon monoxide can build up inside your home making you and your family sick. Another serious concern regarding the water heater flue is the use of single wall pipe. When used in the wrong application, a single wall flue pipe can be a serious fire hazard.
If you are the owner of the home and do not use the house as a rental you may be able to do the work yourself. However, if you have a problem down the road, pulling a permit and choosing a licensed plumber will ensure that you don’t have any hassles dealing with your insurance company. You should also choose a plumber that is able to pull the permit themselves as opposed to having you pull the permit for them. Anytime a plumber pulls a permit the city will do their research to verify that they are in compliance with all local requirements. Checking to be sure that the company insurance has not lapsed as well as being in good standing with the state.