The purpose behind frost-free hose bibs (or faucets) is to prevent water from freezing in the more susceptible piping located near the exterior wall. This is done by design. Properly installed the hose bib itself causes the water supply pipe to be tilted slightly as to reduce the amount of water remaining in the pipe while the water is turned off. Often times the hose bib is incorrectly installed or damaged and therefore cannot perform as designed resulting in leaky joints, or cracked pipes. If you notice that the faucet is leaking or suspect that excess moisture in the area near the faucet is due to a leak, call a plumber immediately. In the picture below you can easily see that the hose bib is turned sideways. However this happened, it has caused a leak that is visible from the outside and in the crawlspace. Sometimes these leaks are not caused by mechanical damage, meaning that they weren't caused by hitting it with
itself becoming damaged from the water inside freezing and expanding to the point where the pipe itself cracks. In some cases the damage may not be found until after the ice thaws. One way to prevent this from happening of course is to use a foam or other material type of insulating cover. These can be purchased at most hardware stores and will usually keep the temperature around the hose bib above freezing by trapping warmer air radiating out from the home inside the cover. They are much cheaper than hiring a plumber to come out and fix a leak.