If you insert an image and it will overlap the textbox area, something has to give. The best way to avoid that is to ensure there's enough space between the textbox and your insertion point before inserting the image. One of the challenges there can be that you have no control over the image's initial size. However, if you create a table cell with a fixed height and width, then insert the image into that, it will be constrained to fit the cell's size.

Other that that, Word has two options for how images are inserted by default - inline or wrapped. You might try changing the setting to see which works best for you.

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Cheers,
Paul Edstein
[Fmr MS MVP - Word]