Rigid exterior insulation should not be attached to foundation walls (as commonly recommended in passive solar manuals) in any area where subterranean termites are found. It gives termites hidden access to the walls of a building. In new construction, an unbroken through-the-wall termite shield should be installed as shown in the drawing. For existing construction, either insulate inside the foundation wall (but not to the ground) or stop exterior insulation at least 6 in. below the top of the foundation. The 6-in. space will allow you to see and destroy any termite tubes constructed between the ground and a wood structure. It’s a lot better to lose a few Btus than the framework of your house.
Tom Bender, Nehalem, OR