Basement insulation can transform your home (or your basement) into a much more comfortable place. But what to insulate? The walls or the ceiling of the basement?
It depends on cost considerations and the intended use of your basement. In wood-frame homes it's usually better to insulate the walls.
Basement wall insulation
If your goal is to transform your basement into an extension of your living area you should insulate the basement walls with rigid foam or closed-cell spray foam.
You may install the insulation either on the inside or on the outside of the walls - there is advantages and disadvantages of each method.
It's the best way to minimize condensation risks and to get a more comfortable basement.
Obviously, you should also fix any air leaks and moisture problems; to do otherwise can mask the problems for a while, but will not solve them and will ultimately damage the insulation.
In new construction, in regions with high water tables or significant risks of flooding, or where the soils have poor drainage, consider the slab-on-grade foundation type or – if the chance of flooding is high – a stilt foundation (in the USA, contact your HUD office on this issue).
Insulating the Basement Ceiling instead of the walls
If you don't intend to use your basement as a living space or a workshop, you may consider the insulation of the basement ceiling instead of the walls.
When insulating, pay attention to possible ducts and pipes running in the basement ceiling; fix any possible leaks and insulate them.
Consider carefully this issue, and the reason why floors over basements are often left uninsulated: the framing and the tubes and pipes installed under the floor, can make the insulation a lot less ineffective.
And do not forget that insulating the basement ceiling doesn't mean that you can ignore what’s going on in the basement walls. If the walls are seeping water, or having leakage problems, you should also fix them..