Insulating your basement walls is critical step in basement finishing for maintaining a comfortable living space. It is also a building code that every basement be properly insulated and most cities are going to require an “Energy” inspection as part of the building permit inspection process.
There are different views on the best and proper way to insulate basement walls. Some will say use a a Rigid Foam Insulation that is sold in sheets (Extruded Polystyrene, or XPS) and apply this directly to the concrete walls before framing. And other say use a paper-faced fiberglass insulation and “stuff” the new basement framed walls full.
And still other say use both the XPS board and then stuff the framed walls with paper faced fiberglass! I have always just used the 3 1/2″ paper-faced fiberglass insulation in my newly framed exterior basement walls as my method of choice! It works extremely well and keeps the basement warm and comfy! In my area of the world the building inspectors require us to use this type because it is considered the correct energy “code” here.
I tell folks to check with their local building code office and ASK! The code office will suggest what they expect to see on “inspection day”. Use the insulation that your code office will approve during your energy inspection to avoid inspection hassles and delays during your project!