Exterior insulation is installed on the outside perimeter of your home's foundation. In order to properly insulate the exterior of your basement, you must expose the outer foundation wall by digging a trench around your home that is equal to the depth of the frost line in your area, or at least 2 feet deep. The insulation is inserted under the bottom of your siding and is protected from moisture using strips of metal flashing. Each panel of insulation is attached to the wall using a mastic adhesive applied in strips. Cut your panels so that they extend at least 1 foot below the level of the ground, and fit them together closely. After the insulation is attached, completely cover it with a moisture barrier and refill the trench. The portion of the insulation that remains above ground is usually covered with stucco or another material to protect it from damage.
Foam board insulation installed along the interior of your basement's walls will help prevent your pipes from freezing during the winter. This type of installation uses foam boards cut to span the distance between the band joist and the floor of your basement. The band joist is the horizontal structural member that rests below the sub-floor of your home. Attach each board to the wall and seal the gaps between boards using plastic sheeting. Sealing the top and bottom of the boards using plastic sheeting measuring 3 feet in width will help prevent moisture from entering your basement, but allow it to dry if it gets wet.
Vapor barriers are plastic sheets designed to limit the movement of moisture. Vapor barriers covering exterior insulation are intended to protect the insulation from insects and moisture in the soil. Interior insulation uses vapor barriers to prevent moisture from entering your basement. These barriers are often attached using staples or duct tape, depending on whether the barrier is outside or inside your basement.
Exterior rigid foam board insulation is often more expensive, since it requires additional materials to cover it up. The building codes in many areas require these materials in order to fireproof the above-ground portion of the insulation. If you want to avoid using plastic sheeting on your exterior insulation, you can use a moisture-resistant paint in its place. Moisture barriers that cover all of the wall insulation inside your basement can trap moisture against the wall, damaging your insulation and leading to mold problems over time.