Pipe insulation does three things: prevents freezing in cold weather, reduces heat loss on hot water lines (saving energy and getting hotter water to fixtures faster), and stops condensation on cold water pipes in humid environments. Foam pipe insulation costs $1-3 per 6-foot section and installs in seconds -- slit it open and snap it around the pipe. Focus on pipes in unheated spaces first: crawl spaces, attics, garages, exterior walls. The first 6 feet of hot and cold pipe leaving the water heater are the highest priority.