Wood Stove Set in Fireplace - Should I Insulate the Gap in the Flue?

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I have a 2015 Jotul F100. It will be sitting 2/3 in an existing masonary FP. So the new SS liner comes off the top and goes through the old Flue, there will be approx 1 square foot of air space all around the liner (picture a 6" tube going through a shoe box and leaving an air gap). My concern is that much of the heat this little monster is putting out will go up that gap and disperse through the clay lined then brick walls.

My WETT certified installer says he can use Roxul Insulation to fill this gap but he is worried that there will not be ventilation in the chimney itself if I do this but is willing to do it anyway (he was a bit annoyed that I was requesting this). There will be a sealed cap on the top and air will not be getting in/out from the top. My theory is that the heat from the SS liner itself will keep the chimney dry inside! My main concern is going to all this effort and loosing much of the heat from an already small stove out the chimney.

Note: I realize many people on here are in very cold climates but here on Vancouver Island it is dampness in the winter, we very rarely go below 0 deg Celsius.

Any advice would be much appreciated!!
 
What you need is referred to a s a block-off plate. There are many threads on this and a sticky how to. Check them out and ask away-
 
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2 very awesome replies! Thanks jatoxico & begreen! I think this is the way to go and now that I know what it is called is even better. My installer had some concern with moisture. If I install a block off plate and seal the top so no water can get in should i expect any issues with no air getting in? The FP is Brick and clay circa 1940. I think he was worried it would start to mold or something... If he is not willing to do the plate I will make it myself.
 
Most installers do not want to do a block off plate, it takes to long for them and they do not know how to price it so they get scared and say they won't do it. No issues of mold as long as the top plate is sealed good. If this is in an exterior chimney I would look at insulating that liner as well.
 
Yes insulate the liner with approved chimney insulation and do a block off plate.
 
Understandable, time is money... not really sure why he acted surprised when i said I thought it might be a good idea, seems like common sense as the heat will go straight up. From everything I have read it can increase the heat in your home quite a bit. I know he is a reputable guy in our city. He said $125 more to install one and I think that is fair but I'm going to try and do it myself as it doesn't look too difficult and begreen left me some pretty good directions! We will see how this turns out
 
You can fill the entire area above the old damper in the area of the smoke shelf w/ Roxul and all the way down to wherever your block-off plate ends up. The idea is to retain as much heat in the liner (flue) so that gases in the venting system stay as hot as possible before exiting. This will help keep creosote formation down as much as possible.

An insulated liner is also a very good suggestion. Now lets talk about wood :)!
 
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