 Re: insulating and rendering the flue?
Frances, Mieno,
You're correct, Frances, the top of the flue will not get very hot at all. I'd close the chase at the top, sloping it for runoff all round. Depending on material, it will breathe sufficiently that closing it will not be a problem. The main thing you're doing is using the air as a passive insulator so any heat from the pipe is not transferred directly to the chase and coating, leading to cracking.
Jim
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