My boat has sound insulation (1 inch foam sheeting with foil facing) on the bulkheads immediately surrounding the engine (Yanmar 2QM15). Not sure if it's original or PO installed, but I suspect the latter.
But the boat really doesn't have a true "engine room", so the bulkheads where the insulation is installed aren't continuous, which means that the engine is not encapsulated by insulation, and to my layman's way of thinking the sound can travel pretty much anywhere. For example, there is only a thin, uninsulated panel between the engine and quarter berth.
I removed some of the insulation to fix some wiring, and doing so made a big improvement in engine access clearances, so I'm thinking about removing it all.
Any reason I shouldn't do this, other than causing (possible) noise level increases?