Thanks jap. As I understand it: THHN can be used in dry and damp locations. THWN can be used in wet locations but still must be protected from physical damage such as me dragging a 40 to 50 lb pump out of a very confined space or rats chewing on wires.
A big question is whether code considers the equipment area of a portable hot tub as normally 'dry location', sometimes 'damp location', or sometimes 'wet locaiont'.
My experience is: should be dry, often damp, sometimes wet, sometimes flooded or submerged and sometimes corrosive if people store chemicals inside the cabinet of the hot tub.
Since I get wet almost every day working on them, I consider the equipment space to be a 'wet working space'. I keep a 18V leaf blower on my van just for drying out things that accidentally get sprayed or splashed in the normal course of fixing things. The pump motors are NEMA 'drip proof' or 'splash proof' and even the circuit boards are dipped and sealed in varnish so everything about the design and UL, CSA or ETL Listing suggests 'wet location'.
In the system pictured above, if the wire shorts to the metal box, a GFCI breaker should trip instantly. If you look close you'll see a green machine screw sticking up through the box. That's one of four screws and two clamps that hold the stainless heater manifold to the aluminum control box.
More importantly, the heater manifold is also a current collector. If the heat element inside the manifold shorts to the water you're soaking in, the grounded manifold that contains the heat element is the shortest path to ground. If everything is wired properly and assembled properly, the GFCI will trip immediately. That's why little details like the heater mounting screws are so important. The stainless heater manifold, the aluminum straps and machine screws that secure the heater manifold to the aluminum control box are all part of the chassis ground.
In most portable hot tubs, L1 is hot to the heat element as soon as the breaker is turned on. L2 or Neutral is switched to make the heater turn on or off. L1 always hot means a heat element short will trip the GFCI as soon as you try to turn it on meaning a heat element short trips the breaker immediately rendering the hot tub unusable until you replace the element.
Bad pun but it's 'shocking' how many tubs I see that are essentially electrocutions waiting to happen. I frequently tell my customers a portable hot tub is the only appliance you bring home, connect to electricity, fill with water and then climb inside so you can sit in water up to your neck that's connected to 220V. When Handy Andy Homeowner wants to argue about an obvious electrical hazard...I know I'm talking to the person who wired it and I sometimes wonder if I'm interfering with natural selection.