Here are the minimum code requirements for basement wall insulation — assuming that you are insulating with foam, not fiberglass batts:

• Climate Zone 3: R-5
• Climate Zone 4 (except Marine Zone 4): R-10
• Marine Zone 4 and Climate Zones 5, 6, 7, and 8: R-15.

I used to believe that the best location for basement wall insulation was on the exterior. In recent years, however, I’ve decided that interior basement insulation makes a lot of sense.

However, there are valid reasons for both approaches, and either way can work fine. So if you prefer one approach, don’t hesitate to use it.

Here are the advantages of exterior basement insulation:

• Exterior insulation keeps the concrete within the home’s thermal envelope; this increases the amount of interior thermal mass and reduces the likelihood of temperature swings if heating and cooling equipment stops working. (However, it’s worth pointing out that the advantages of interior thermal mass are often exaggerated.)
• Exterior insulation protects the dampproofing or waterproofing layer from damage during backfilling.
• Insulating on the exterior allows a builder to install an uninterrupted layer of rigid foam from the foundation footing to the rafters. While this approach isn’t required — you don’t have to insulate above-grade walls with exterior foam if you don’t want to — many builders like it.
• Exterior insulation provides more interior space in your basement than interior insulation.
• It’s easier to insulate and air-seal the rim joist area with exterior insulation than with interior insulation.
• If you insulate on the exterior, you avoid the expense of interior studs and drywall.
• Exterior insulation leaves the interior of the concrete wall exposed (assuming the basement is unfinished) so that the concrete can be inspected at any time for cracks.

• The insulation work integrates more smoothly with the construction schedule, since it happens after the building is dried in rather than when the excavation contractor is eager to backfill the foundation.
• It’s easier to provide an uninterrupted connection between the below-slab insulation and the wall insulation when the insulation is on the interior. If you install the wall insulation on the exterior, the footing will usually interrupt insulation continuity. (For more information on this issue, see Foam Under Footings.)
• If you insulate on the interior, you avoid the hassle of figuring out how to protect the above-grade portion of the exterior basement insulation.
• If you plan to install brick veneer on your above-grade walls, interior basement insulation makes more sense than exterior insulation. (For more information on the incompatibility of brick veneer with exterior basement insulation, see Image #4, below.)

If you want to insulate an existing basement, you’ll probably be working from the interior. Before installing a layer of foam insulation on an existing wall, the first step is to verify that the basement wall doesn’t have a water-entry problem.

Diagnosing and fixing water-entry problems in existing basements is a big topic in its own right, and is beyond the scope of this article. Suffice it to say that if your basement walls get wet every spring or every time you get a heavy rain, the walls should not be insulated until the water-entry problem is solved.

Among the possible solutions to this problem:

• Adjusting the grade around your house so that the soil slopes away from the building on all four sides;
• Installing roof gutters connected to conductor pipes that convey the roof water away from the foundation;
• Excavating the exterior of your foundation and installing new footing drains leading to daylight;
• Installing an interior French drain around the perimeter of your basement and connecting the drain to a sump equipped with a sump pump; and
• Installing a layer of dimple mat against the basement walls before insulating.

The only type of insulation that makes sense for stone-and-mortar walls is closed-cell spray polyurethane foam.

If your basement has poured concrete or concrete-block walls, you can proceed with the same methods used for new construction — as long as you’re sure that the walls don’t have a water-entry problem.

Crawl space walls should be insulated with the same methods used for basement walls. For more information on insulating a sealed crawl space, see Building an Unvented Crawl Space.

basement wall insulation is almost always cost-effective. Performing this work will lower your energy bills, and will also provide an important side benefit: insulated walls are less susceptible to condensation and mold.

That means that insulated basements stay dryer and smell better than uninsulated basements.