BASEMENT INTERIOR WALL INSULATION with foams are a better choice than insulation with fiberglass batts
Un-insulated basements are typically damp, cool and disagreeable places. Insulation can make them a lot more comfortable and useable.
Without proper levels of insulation, even if there are no leakage paths, heat will flow through the construction materials in the walls and ceilings, increasing the heating (and the cooling) costs, and making the basement and the house uncomfortable places.
Basement insulation doesn't eliminate structural sources of moisture, and problems involving the foundation. These problems should be fixed before the insulation is fitted.
Besides, insulation also makes the walls warmer, minimizing condensation risks.
When not to insulate the interior of basement walls
If there is signs of water in your basement, if you are having outdoor drainage problems, if your foundation walls are not properly sealed and waterproofed, do not insulate your basement. Fix the problems first.
If there is water seeping through the walls and signs of moisture, do not insulate your basement. Mold, mildew and condensation will be aggravated.
Do not insulate your basement without carefully sealing it first. Cracks in the walls, and holes and gaps in service penetrations or in the sills and back and deck floor above should be properly sealed before installing any insulation.
basement Walls insulation on the Interior with Fiberglass batts
It's common to insulate the basement walls by building a framed wall against the foundation, and by filling it with fiberglass batts or a similar insulation material, and by covering the frame and the batts with drywall.
But that's not the ideal method, though it may work in very dry basements (if you intend to use fiberglass batts, choose unfaced batts to give moisture an opportunity to escape).
basement walls insulated on the Interior with Plastic foams or Mineral Wool
There is a much better choice than fiberglass batts: sheets of polystyrene (EPS or XLS) foam, or closed-cell spray polyurethane foam, or polyisocyanurate, or mineral wool batts, attached directly to the concrete foundation walls.
Like fiberglass batts, the foams (or the mineral wool) should to be protected with drywall (or other covering, like cement tile backer board; cement board is more expensive but is mold-unfriendly, contrary to drywall).
Ideal amount of insulation (approximate):
R-20 (Metric: U-0.28), colder climates:
Rigid polystyrene (expanded) or mineral wool: 5 inches (13 cm)
R-10 (Metric: U-0.57)(moderate climates):
Rigid polystyrene (expanded) or mineral wool: 2.5 inches (7 cm)
At least R-5 (Metric: U-1.1)(hot climates):
Rigid polystyrene (expanded) or mineral wool: 1.3 inches (3.5 cm)
A detail: hold the bottom end of the drywall one inch above the floor, to prevent ground water from wicking up.
Stone foundation basement walls
If you have stone-rubble masonry foundation walls, use sprayed polyurethane. The foam is sprayed between and behind a frame wall, built against the foundation.
This method requires professional application. See for more details: OEE Basement insulation methods