diff --git a/README.md b/README.md
index e340dc1..08a1584 100644
--- a/README.md
+++ b/README.md
@@ -9,6 +9,9 @@ Upon first run it will generate thumbnails for all images and videos at `BASE_PA
 - Video streaming with HLS
 - Tag-based organization
 - Memories API for browsing photos by date
+- **AI-Powered Photo Insights** - Generate contextual insights from photos using LLMs
+- **RAG-based Context Retrieval** - Semantic search over daily conversation summaries
+- **Automatic Daily Summaries** - LLM-generated summaries of daily conversations with embeddings
 
 ## Environment
 There are a handful of required environment variables to have the API run.
@@ -26,3 +29,38 @@ You must have `ffmpeg` installed for streaming video and generating video thumbn
 - `WATCH_QUICK_INTERVAL_SECONDS` (optional) is the interval in seconds for quick file scans [default: 60]
 - `WATCH_FULL_INTERVAL_SECONDS` (optional) is the interval in seconds for full file scans [default: 3600]
 
+### AI Insights Configuration (Optional)
+
+The following environment variables configure AI-powered photo insights and daily conversation summaries:
+
+#### Ollama Configuration
+- `OLLAMA_PRIMARY_URL` - Primary Ollama server URL [default: `http://localhost:11434`]
+  - Example: `http://desktop:11434` (your main/powerful server)
+- `OLLAMA_FALLBACK_URL` - Fallback Ollama server URL (optional)
+  - Example: `http://server:11434` (always-on backup server)
+- `OLLAMA_PRIMARY_MODEL` - Model to use on primary server [default: `nemotron-3-nano:30b`]
+  - Example: `nemotron-3-nano:30b`, `llama3.2:3b`, etc.
+- `OLLAMA_FALLBACK_MODEL` - Model to use on fallback server (optional)
+  - If not set, uses `OLLAMA_PRIMARY_MODEL` on fallback server
+
+**Legacy Variables** (still supported):
+- `OLLAMA_URL` - Used if `OLLAMA_PRIMARY_URL` not set
+- `OLLAMA_MODEL` - Used if `OLLAMA_PRIMARY_MODEL` not set
+
+#### SMS API Configuration
+- `SMS_API_URL` - URL to SMS message API [default: `http://localhost:8000`]
+  - Used to fetch conversation data for context in insights
+- `SMS_API_TOKEN` - Authentication token for SMS API (optional)
+
+#### Fallback Behavior
+- Primary server is tried first with 5-second connection timeout
+- On failure, automatically falls back to secondary server (if configured)
+- Total request timeout is 120 seconds to accommodate LLM inference
+- Logs indicate which server/model was used and any failover attempts
+
+#### Daily Summary Generation
+Daily conversation summaries are generated automatically on server startup. Configure in `src/main.rs`:
+- Date range for summary generation
+- Contacts to process
+- Model version used for embeddings: `nomic-embed-text:v1.5`
+