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I'm thinking about finishing my basement. It currently has the blanket insulation that the builder installed when we built the house last year. I'm unfamiliar with this product. Is it meant to be used behind my framing or should I take it out and use something else. I would love to use it since I already have it.

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Do you know if a waterproofing system was applied to the exterior? If so, it's probably fine. If not, I'd suggest this method: diy.stackexchange.com/a/8644/1209 –  DA01 Dec 9 '13 at 22:49
On the outside of the foundation they sprayed some black tar looking stuff, I'm assuming that is water proof. So I can just leave the blanket up and build my framing in front of it? Will I need any other insulation on top of it, or will it be enough? –  Jared Christensen Dec 10 '13 at 14:43

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If the exterior of the foundation has the black waterproofing membrane, you're fine to build your framed wall right up to the vinyl blanket insulation in the basement. When I finish basements for my clients, they always ask my opinion. Here it is: I don't like spending money twice. If there is already insulation on the wall the meets the code requirement, then we'll frame right to in and leave it in place. The white vinyl insulating blanket usually has an R value of 10. In Colorado where I live and work, that's the code requirement. You won't see a lot of thermal benefit from upgrading the insulation to a R-13 or R-19. To me it's not worth the cost of removing and replacing. (not to mention the disposal of the blanket - it takes up a ton of dumpster space!) That said it would be easy to add batt insulation in addition to the current insulation after you frame the walls.
One note: you do not want to compress the vinyl blanket with the wood framing or you'll reduce the effectiveness. If you do compress it, take a knife blade and run it down both sides of each stud and it will allow the insulation to expand into the stud cavity.

Your main source of heat loss in the basement is going to be around the windows. Take the time to seal the windows well. Hope that helps!

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Yes you can but it can be the only layer, and I would draw concern with the R value the blanket has. It may at best only have an R value of 5, maybe more, and perhaps that is enough. For reference, foam board on the average has a R value of 5.5 per inch

If your basement has a bit of exposure above the outside grade, and you get really cold winters, I would truly consider upgrading your insulation. Insulate the whole wall too if not already done. Some codes may allow only the top of the wall needing insulation, down to 2 ft. below grade. Basement walls conduct the cold very well and an exposed part of the wall will still radiate the cold

The link that DAO1 has, uses good procedures for a basement install, and as he cautions, do not layer insulation with vapor barriers, there can only be one toward the heated side, an additional vapor barrier will trap moisture and cause problems.

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Very helpful, thank you. –  Jared Christensen Dec 10 '13 at 17:06

If I was finishing a basement these days, I'd pull out the current insulation and have somebody come in to shoot a few inches of foam. That gives a nice monolithic insulation blanket.

The best reference I know on these sort of things is BuildingScience.com They do lots of research and have great articles on how to do things right.

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