There are two possible suspects (or 3) here.. The third however seems to have been ruled out.
First: a question: Did UNPLUGING the water heater fix it? If so see prior response about the heat element. but also....
If the plug is in an outside compartment or the heat element is outside, CHECK all affiliated wiring and connecitons, boxes, and control boards for evidence of water/moisture/arcing/shorts.
NOTE: on my Atwood, the 120 volt side of life is INSIDE out of the rain.. This is not always the case.
If unpluging did NOT fix it you have additional suspects but I'll leave those for next go-round.
Home was where I park it. but alas the.
2005 Damon Intruder 377 Alas declared a total loss
after a semi "nicked" it. Still have the radios
Kenwood TS-2000, ICOM ID-5100, ID-51A+2, ID-880 REF030C most times