The question then becomes whether to insulate the basement exterior or interior. Insulating the exterior keeps the foundation concreted within the home’s thermal envelope, reducing the likelihood of temperature swings. It also protects waterproofing and doesn’t reduce the interior space in your basement. It is easier to insulate and keeps the interior wall exposed, which allows for inspection of cracks. It is probably the preferred method of basement insulation for new homes. However, interior basement insulation works better with the construction schedule, since it can happen later in the process, and won’t interrupt the excavation backfill process. It is easier to connect the below slab insulation and the wall insulation.