Safety: Tankless water heaters produce heat, which can be a potential fire hazard if not installed with proper clearance. Adequate clearance allows the heater to dissipate heat and prevents combustible materials from coming into contact with the hot surface.

Performance: Proper clearance ensures adequate airflow and ventilation around the unit, which is necessary for efficient operation. A lack of clearance can cause the heater to overheat, resulting in decreased performance, increased energy consumption, and potentially shortened lifespan.

Compliance: Local building codes and manufacturer guidelines specify the minimum clearance required for the safe installation of tankless water heaters. Failure to follow these requirements can result in non-compliance and potential liability issues in case of property damage or personal injury.