In old houses that have not been insulated and/or remodeled the rim joists are covered with black mold and some dry rot.
This condition was and is being caused by no insulation on this area. With no insulation in this rim joist and the warmest air in any area is located at the ceiling. This air also has the most humidity in it.
When the air migrates across the ceiling to the out side wall 2 thing happen.
The 2nd thing that happens is it starts a thermo train where warm air rushes to the exterior wall, it cools and drops to the floor, then the air migrates across the floor to the center of the house where it’s warmed back up.
Warm air being lighter than cold air it moved back up to the ceiling and the process starts all over.
Adding insulation to the rim joist slows down the thermo train. If you install the wrong type of insulation you will cause a lot more mold and rot and invite many different type of bugs to live with you.
The worst type of insulation is porous type (fiberglass, cellulose, mineral wool etc.) If this type is to be used install a vapor barrier on the warm side of the insulation to keep any humidity from getting into the insulation.
Vapor barrier can be 6-mill poly — insulate, caulk all surfaces with a polybutylene caulk this stays soft than apply the poly over it and staple the poly in place making a perfect seal. Do this to all rim joist areas.
Vapor barrier can be foam board — insulate, cut the foam board to fit snug in each rim joist space then caulk all edges of the foam board.
Another way of getting around the problem is to insulate the rim from the outside. This only works in new construction while building.
Move the rim joists in 2″ and install a 2″ foam board and then sheath over it. The drawback is you must install solid material where you are going to add a deck or other structural framing.
Another type of insulation that can be used is Icynene this you can by on E-bay or hire a contractor to have is sprayed into the rim joist cavities.
This type of insulation will not allow the humidity to pass through it making it great for this type of application.