Basement walls should be insulated with non-water sensitive insulation that prevents interior air from contacting cold basement surfaces—the concrete structural elements and the rim joist framing.

Is it OK to not insulate basement walls?

Impervious insulation is always an excellent idea for basement walls, but it’s absolutely essential where the floor joists of the level above meets outside walls along the edges of a basement ceiling.

Why you should not insulate your basement?

But while you can install fiberglass in basements, it’s not the ideal choice in damp environments. Now, the insulation itself is resistant to moisture. The problem is that it can be susceptible to mold growth.