Insulation is the term used for a variety of materials used to reduce the transfer of energy. Insulation is used around electric wires to protect the wire from the environment or the environment (like people) from the wire. It is a key safety feature in wiring. Exposure to water can corrode wires, increasing their resistance, which in turn creates heat buildup the system was not designed for - potentially causing fires. Furthermore, separating the wire from its external environment prevents the flow of charge out of the wire in places it is not supposed to go, like a person who touches the wire.
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