Placing insulation outside of the sheathing (exterior insulation) results in the inside surface of the sheathing having a higher temperature, leading to decreased risk of condensation inside of the framing cavity.

Assemblies without any exterior insulation are at greater risk of damage due to condensation.

With high-ratio thicknesses of exterior insulation, the sheathing will be above the interior dew point and condensation within the framing cavity will not be a problem. The resulting assembly is not at risk of vapour diffusion condensation or air leakage condensation and allows for a high degree of design flexibility and redundancy.