Thinks insects possibly live inside (8)
I believe the answer is:
believes
'thinks' is the definition.
('believe' can be a synonym of 'think')
'insects possibly live inside' is the wordplay.
'insects' becomes 'bees' (bee is a kind of insect).
'possibly' indicates anagramming the letters.
'inside' is an insertion indicator.
'live' with letters rearranged gives 'liev'.
'bees' going around 'liev' is 'BELIEVES'.
(Other definitions for believes that I've seen before include "Accepts as true" , "Credits" , "Swallows" .)