It’s a good idea to insulate either the floor above your crawl space or your foundation walls (and the crawl space’s dirt floor) if you live in a cold climate. The choice between the two depends on whether the crawl space must be vented in winter, which would allow cold outdoor air to pass through a vent in the insulated foundation wall, greatly reducing the insulation effectiveness. Crawl spaces are notorious for moisture problems, when homes are built in damp ground or above sub-surface aquifers.
Be sure you that install a tight-sealing ground-moisture barrier before you insulate the crawl space. A ground-moisture barrier is a sheet of heavy polyethylene plastic that covers the ground, preventing moisture from rising out of the ground and into the crawl space. The ground-moisture barrier is designed to prevent moisture from entering the crawl space, which is a far better strategy than hoping that moisture is removed by foundation vents. Foundation vents aren’t very effective at removing crawl space moisture according to field observations and building science reports.
If you decide to insulate the foundation walls of your crawl space, you should close off the foundation vents, at least during the winter. Check with a local code official or heating technician before closing the vents, especially if a combustion appliance is located in the crawl space. The vents might supply combustion air to the appliance. Sealed-combustion (also called direct vent) appliances draw combustion air from outdoors and would eliminate this concern.
It is always better to insulate the exterior of masonry walls but that involves digging for existing crawl spaces so most people choose to insulate the foundation walls on the inside. Foam sheets are the best insulation choice because of their moisture resistance but faced fiberglass is also a common insulation solution.
Whether you insulate the floor or foundation wall, you should insulate the rim joist (also called: band joist) at the same time. Although fiberglass is most commonly used, foam or a combination of foam insulation and fiberglass is better because moisture sometimes migrates behind the fiberglass and condenses on the cold rim joist, causing damage from mold or rot. Spraying polyurethane foam in the rim-joist area is now a common practice.
Some building inspectors may insist that foam be covered by an ignition barrier whenever installed toward the interior of the crawl space.
The insulation is still incomplete if only the foundation walls are insulated and not the floor above the crawl space. In cold climates, the ground floor of the crawl space should also be insulated to complete the insulation layer around the home. Fiberglass blankets faced with a vapor-permeable facing such as MemBrain® is the best choice for insulating over an airtight ground moisture barrier. The roll seams should be taped together with constriction tape to prevent air convection around the insulation.
The recent trend toward conditioned crawl spaces with supply and return air to heat and cool them is an unfortunate development. It is another band-aid approach to solving moisture problems without considering the home’s energy efficiency. New home buyers would choose shallow frost-protected concrete slabs for foundations. Crawl spaces, if used for new home foundations, should include drainage, exterior waterproofing, and airtight ground moisture barriers.
Two inch polystyrene insulation on basement walls. Reinforced polyethylene ground moisture barrier is sealed at seams to prevent mold. Installing fiberglass insulation over the ground-moisture barrier is an excellent idea in cold climates if the floor above the crawl space isn’t insulated.
Both The Homeowners Handbook to Energy Efficiency and Saturn Energy Auditor Field Guide contain more information on insulation types and installation.