Michigan building code requires insulated basement walls. If I install 2" rigid foam to the exterior cement what do I cover the exposed foam with that will be above grade? Stucco has been suggested but I have heard stucco does not stand up well to the repeated heat/thaw cycles common in northern Michigan, Also, 2 inches of foam will leave a lip below the siding installation of approx 1", how is this accounted for? Is a flashing installed behind the siding and over the 2" foam? I am using 5.5" rigid foam in 2x6 walls for insulation. Is 1" rigid foam installed over the exterior seathing sufficient to accomplish a thermal break on the wall studs? Thank you, Randy

Is this built? If not build with ICFs (everything else is inferior) and flush your sheathing with the outside of ICFs (better yet go all ICF). EIFS stuccos such as Total Wall work great on ICFs in MN and the U.P.

If non-ICF foundation is in, the insulation usually starts below grade.

I used stucco with fibers + polymer (no mesh) similar to this. Works fine in MI. Maybe just bevel the top corner of the foam and cover it with stucco too. Consider 3" (staggered 2x1.5") above grade.

I'm curious - why rigid foam in the studs (vs cellulose plus more exterior foam).