If you have a basement or a crawl space, chances are pretty good that the walls are not insulated. If you have heating equipment in the space, it's probably not very cold in the winter, either—the thermal boundary is ambiguous. If you use it for anything besides storage, or if you are planning to finish all or part of the basement later, I recommend insulating the foundation walls rather than the floor above. I also recommend insulating the crawl space walls instead of the floor joists. Remember that if you do insulate the floor, you will also need to insulate the furnace ducts or the heating pipes in the basement.
Foam insulation with drywall
If you insulate the walls, I recommend using rigid foam board, or rigid foam with a stud wall. It’s common to build a stud wall and put fiberglass in the wall cavities, but this may result in mold or moisture problems, regardless of the climate (see the drawing above). Extruded polystyrene (which is typically blue, yellow, or green) is, for several reasons, the best material to put against a foundation or crawl space wall. It doesn’t deteriorate when exposed to moisture and is vapor-permeable enough to allow walls to dry in either direction—an important quality for foundations.
Most of the heat loss in a foundation wall occurs near the top of the wall, where it’s exposed to outdoor temperatures, but I recommend insulating the entire wall. The cost to insulate the entire wall is not much more than doing just the upper half. Also, if you insulate and finish the entire wall, you will have a much nicer finished space in the basement.
86-1.jpg: Basement Condensation: Foundation walls are often cool, and they get cooler when they are insulated. If indoor air can circulate past the insulation, it's more likely to cause condensation on the foundation wall. The resulting damp conditions can contribute to smelly and unhealthy mold growth. Warm air leaking into floor joist bays; Moisture condenses on the cool foundation wall; The concrete wall is colder because of insulation; Studded foundation wall with fiberglass insulation batts; Humid indoor air leaks into the wall through cracks and gaps; Drywall.
I recommend a minimum insulation value of R-10 (2 in. of XPS). In cold climates with full basements, you can double that with a 2 x 4 wall built inside the foam and insulated with fiberglass batts. Either way, set the foam board against the wall, then build a 2x4 stud wall just inside to hold the drywall in place. Code requires that the dry wall not depend on adhesives for its attachment to the foam board.
As an alternative to building an entire stud wall, you can install 1x3 vertical furring strips to hold the foam in place and provide a base for attaching the drywall. The wood furring must be mechanically attached to the foundation wall with powder-actuated nails or concrete screws. Make sure the fasteners are long enough to pass through the foam board and furring and attach reliably to the foundation wall. Then the drywall can be screwed directly to the furring strips.
A recipe for mold and rot: Wood studs and fiberglass
against an uninsulated concrete foundation wall can harbor mold. Humid indoor
air leaking through gaps around the plate, electrical boxes, or elsewhere can
condense on the cool concrete and damage the wall.
To avoid moisture problems, hold the bottom end of the drywall at least 1/2 in. above the floor to pre vent wicking of water. Note that this wall needs no vapor barrier.
Instead, insulate behind the studs with 1-in. to 2-in. polystyrene
insulation. The wall is then insulated with fiberglass batts.
Basement Finish Materials
If you are trimming finished basement walls with baseboard, consider installing molded vinyl or a fiber-cement product to help protect them against moisture and mold. If the basement is damp, consider using cement tile backer board instead of drywall. It’s more expensive, but it won’t break down with moisture. Most important, cement board lacks the paper facing that makes drywall a very mold-friendly material. A compromise: Install cement board for the bottom 1 ft. to 2 ft. and moisture-resistant drywall for the rest. I use skim-coat (veneer) plaster for a nice finish on cement-board wall surfaces.
According to Code
Building codes require that foam board be covered with a minimum of ½-in, drywall or ply wood as a fire barrier. In a crawl space, the floor may be considered adequate separation between the foam board and the living space—but check with your local building inspector to make sure.