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The primary reason homeowners insulate their pipes is to prevent the transfer of heat from steam or hot-water pipes to the surrounding air or from the surrounding air to cold-water lines. In some regions, where the temperatures drops to extreme levels, insulation can prevent water from freezing inside the pipes, most notably when the pipe runs along the exterior of the structure. Thus, hot-water lines are insulated to prevent the loss of heat from the hot water, while potable waterlines are insulated to prevent absorption of heat in drinking water.

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