Hello, I'm curious to know out to properly insulate a heated crawlspace pwf wall with batt insulation. The ontario building code requires a 2 inch gap between the crawl space floor and insulation. Doing this would result in a void in a small portion of the assembly to have no insulation value.This is due to the floor being 1/2 inch above the bottom plate for the foundation wall. The ground cover(poly) is then required to run up the foundation wall. Therefore there will be a void in the foundation wall which is uninsulated and covered with poly. Could someone explain the best approach? What potential problems will occur if I leave a two inch gap? Just heat loss? Either way I think its a losing situation because if the gap isn't maintained you risk wetting the insulation and possible mold growth. What do you think???

The best approach would be to not use batt insulation alone.

The heat loss of the 2" gap well below grade is negligible except in extremely high performance buildings. Is the slab even insulated?

The above grade portion of the wall is likely to suffer condensation/frost in the air permeable batt insulation with or without the 2" gap, with some (temporary) loss of performance with some risk of mold.

The better approach would be to use air impermeable rigid foam against the PWF for at least a sufficient fraction of the total R to be able to use batt insulation without an interior vapor barrier tighter than cheap latex on gyprock. There is no foundation specific guidance in the IRC, but if you followed the prescriptives in TABLE R702.7.1 for above grade walls it will be good enough:

http://codes.iccsafe.org/app/book/content/2015-I-Codes/2015%20IRC%20HTML/Chapter%207.html

Ontario is a big province spanning climate zones 5-8, so your location matters.

Also I should note that there is a double 2x4 around the inner perimeter of the bottom plate to provide support from soil pressures. The uninsulated slab is contained within the perimeter of this arrangement. I'm trying to think of any potential effects the insulation gap may have? But my only thoughts at this time would be heat loss and condensation, which is really unavoidable with the current arrangement. As for mold, the moisture would pool at the bottom plate and the two inch will prevent the contact of the water and insulation, correct? I must be missing something.

At this time I only have access to fiberglass batts unfortunately. Either way I think I'm losing

Before I met my wife my inlaws had their retirement lakehouse built with a full PWF with a walkout portion on the lakeside. The insulation was fiberglass batt and then they put a vapor barrier over all the walls, underground and walkout. I say before I met my wife since if it would have been after I would have advised against it and it probably wouldn't have been built this way in which case I wouln't have found out what happens over time in an assembly doomed for failure.

Obviously if you were to post that assembly on a site like this you'd get all kinds of "experts" who would tell you it will mold and rot, I read those responses over and over and came to believe the same, except one year when I went into an unfinished room during winter and sliced the vapor barrier open top to bottom and took a peek.

I thought it was going to be nasty except It was dry as a bone, fiberglass was dry, fluffy and pink, wall sheathing was dry, no frost or staining anywhere middle top or bottom.

This is zone 6 really close to zone 7 in mn, sand backfill which I think is key. I've pulled lots of poly off basement walls over fiberglass from old houses to the mid 90's/ early 2000 "junk" generation almost hoping to find major disasters to validate expert opinion, and it is a code violation now, but I've yet to find one in failure mode.

I've yet to find one in failure mode.

On the other hand, one can enter "basement fiberglass mold" into google and see numerous examples. Would be interesting to know what more about the differences in conditions.

I'd put some EPS against the wall and tape it up well.