Insulating water intake?

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SaltspringSunset

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Hey DIY friends! We've recently bought an old house, and it has a few... sketchy things going on ;) Definitely a learning curve from renter to owner too...

Aside from a lot of very questionable renos to our quirky place, someone had the water redone a few years ago and the plumber stuck it through a hole low down through the siding of the house. The problem? It doesn't go into the ground until about a foot away from the house. The remainder is floating in the air. It's PEX, not copper.

The previous owner built a small bottomless wooden box around the floating part and stuffed it with thin rigid blue insulation. The box is full of bugs and moisture (it's right below an outside hose tap, so it gets dripped in) and the siding is rotting there because of it.

How can I better insulate the water intake? Rebuild the box? Use pipe-insulation? If so... should the insulation go through the siding or should I caulk it to it?

Any better ideas?

We're in the PNW so it only gets below -5C here occasionally, for the record. So it might not need much.
 
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