Are there every ANY situations where a water heater is installed in locations where leakage of the tanks or connections will NOT cause damage. If so where and if not why did the code have the exclusion present?

My thinking here is the local AHJ do not (to my knowledge) and have not required a pan when the heater is located in a garage.
My thought is that the damage pertains to damage to the structure.
Now, as I said "I" always call it out, but the AHJ does not.

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Jim Luttrall
Mr. Inspector.net, Inc.
Allen, Texas 75002