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Insulating your hot water pipes reduces heat loss and can raise water temperature 2°F–4°F hotter than uninsulated pipes can deliver, allowing you to lower your water temperature setting. You also won't have to wait as long for hot water when you turn on a faucet or showerhead, which helps conserve water.
Paying for someone to insulate your pipes—as a project on its own—can make economic sense . If there are uninsulated water pipes in or near exterior walls, they can burst in freezing weather, which can be catastrophic. Having the insulation done during new construction of a home, during other work on your water heater or pipes, or insulating the pipes yourself, is well worth the effort. In special cases, such as when the fuel used for heating water is very expensive, the distance traveled by the pipes is far, the pipes are exposed to very cold air (in which case they should be insulated anyway to prevent freezing), and if the household uses a lot of water, much higher energy savings can be obtained. In these cases, cost savings may offset paying for someone to do the job for you.
Source: Save Energy at Home, ENERGY STAR
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