I live in a condo. My bathroom got destroyed by water from the next
door neighbor's unit. Over some period of time water flowed in and the
insulation was soaked and mildewed. So I need to keep the water out
from both my side (easy) and the outside (hard).

I would like to keep the water out of the insulation. Someone
suggested to me that i use encapsulated insulation. However, I cannot
find it anywhere. I went to my local home contractor supply stores.
None. Home Depot: None.
Lowes: The folks there did not even know what insulation was.

Is there some alternative to encapsulated insulation? Where could i
find it?