- What the wood paneling is nailed to (2 x 4 or fur strip),
- How much space you have to work with, and
- How much insulation and R rating you want to install.
The wood paneling in our basement was nailed to fur strips with no insulation behind them. We could have removed all of the wood paneling, installed insulation and then nailed drywall to the existing wood fur strips. The drawback was that we would have only been able to install R-11 strip panels and not the insulation bats at a higher R 19 value. Instead of pulling out the wood paneling, we left it in place and framed over it with new 2 x 4s and 2 x 6s. We were able to insulate with R-19 bats on both exterior and interior walls. Yes, we had to move the electrical outlets and switches as well as some duct work, but we think it was worth it. We then installed 1/2 inch dry wall on the insulated 1 x 6s and primed and painted them. The result after adding new lighting and flooring was a clean look and very comfortable room for year round use. (Note: were still painting around fireplace mantle). If your wood paneling is nailed to 2 x 4s, considering either blowing insulation behind the wood paneling, then you can either paint over it or drywall over it. On the other hand, if you don't want to blow in the insulation, than rip out the paneling, install the R-19 insulation, drywall, prime and paint. See our separate article on updating a wood paneled room that does not need to be insulated.
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