Systems and methods are provided for insulation and moisture drainage. One exemplary embodiment is an apparatus comprising a bay blanket configured to insulate an aircraft. The bay blanket includes insulation, and a first waterproof lip that protrudes from the insulation in an outboard direction towards a frame of the aircraft and extends along a length of a leftward side of the bay blanket. The bay blanket also includes a second waterproof lip that protrudes from the insulation in an outboard direction towards the frame of the aircraft along a length of a rightward side of the bay blanket.