Insertions and deletions (indels) are common sources of structural variation, and insertions originating from spontaneous DNA lesions are frequent in cancer. We developed a highly sensitive assay in human cells (Indel-Seq) to monitor rearrangements at the TRIM37 acceptor locus which reports indels stemming from experimentally-induced and spontaneous genome instability. Templated insertions derive from sequences genome-wide and are enriched within 100 kb of donor regions flanking a DSB. Insertions require contact between donor and acceptor loci as well as DNA-PK catalytic activity. Notably, these templated insertions originate from actively transcribed loci, underscoring transcription as a critical source of spontaneous genome instability. Transcription-coupled insertions involve a DNA/RNA hybrid intermediate and are stimulated by DNA end-processing. Using engineered Cas9 breaks, we establish that ssDNA overhangs at the acceptor site greatly stimulate insertions. Indel-Seq revels that insertions are generated via at least three distinct pathways. Our studies indicate that insertions result from movement and subsequent contact between acceptor and donor loci followed invasion or annealing, then by non-homologous end-joining at the acceptor site.