No insulation at all. These hydrants use a long pipe that extends down three to five feet underground, where they are attached to a water supply line. That's deep enough that it isn't supposed to freeze. The actual valve is located there. When you turn it on (by tripping a long vertical lever) the water rises in the vertical pipe until it comes out the spout. When you turn it off, the water in the vertical line drains back out underground, leaving nothing to freeze.

The problem is likely occasioned by the exceedingly warm weather we had in December and January, with lots of rain. The ground is saturated to considerable depth, and then froze in the cold. Water did not drain from the vertical line because it had nowhere to go, and then froze there.