diff --git a/frontend/src/App.vue b/frontend/src/App.vue
index 2d8d4ce..8ed5c79 100644
--- a/frontend/src/App.vue
+++ b/frontend/src/App.vue
@@ -1055,6 +1055,11 @@ async function sendAiChat() {
         content.value = content.value.trimEnd() + '\n\n' + editContent
       } else if (hint === 'PREPEND') {
         content.value = editContent + '\n\n' + content.value
+      } else if (hint === 'CURSOR' || hint === 'INSERT') {
+        // Insert at cursor position
+        const ta = editor.value
+        const pos = ta ? ta.selectionStart : content.value.length
+        content.value = content.value.substring(0, pos) + editContent + content.value.substring(pos)
       } else {
         // REPLACE or unknown — replace entire document
         content.value = hint === 'REPLACE' ? editContent : fullText
diff --git a/internal/api/ai.go b/internal/api/ai.go
index c695c76..56828de 100644
--- a/internal/api/ai.go
+++ b/internal/api/ai.go
@@ -158,11 +158,11 @@ func (s *Server) handleAIChat(w http.ResponseWriter, r *http.Request) {
 	var systemPrompt, userMsg string
 	if req.Mode == "edit" {
 		systemPrompt = "You are a document editor. The user will give you a markdown document and an instruction. " +
-			"Return ONLY the new or changed text that should be inserted/replaced. " +
-			"Do not return the entire document. Do not add explanations or wrap in code fences. " +
-			"If adding content, return only the addition. If modifying, return only the modified section. " +
-			"Start your response with a location hint on the first line: APPEND (add to end), PREPEND (add to start), or REPLACE (replace entire document). " +
-			"Then the content on the next line."
+			"Return ONLY the new or changed text. Do not return the entire document unless asked to rewrite it. " +
+			"Do not add explanations or wrap in code fences. " +
+			"Start your response with a location hint on the first line: " +
+			"APPEND (add to end), PREPEND (add to start), CURSOR (insert at cursor position), or REPLACE (replace entire document). " +
+			"Then the content on the next line. Use CURSOR when the user says 'here' or the instruction implies inserting at a specific point."
 		userMsg = "Document:\n\n" + req.Content + "\n\nInstruction: " + req.Message
 	} else {
 		systemPrompt = "You are a helpful writing assistant. The user has a markdown document open. Answer concisely in markdown."