You may dream that you are suffering from insanity or madness when repressed feelings, memories or parts of your personality begin coming to the surface. Until you learn how to integrate these emerging thoughts with aspects of yourself that you are familiar with, your dreaming mind may interpret them as symptoms of insanity.
A dream that you are insane can also mean that a real life situation seems “crazy” to you.
If someone else in your dream suffers from insanity, it could be a message that something about their behavior isn’t “making sense”. Your dream could be telling you that you should pay more attention to their actions.
Alternatively, a dream that someone is mad can be a message that there is no explanation for their behavior and there is no way for you to control it, so you should not focus too much attention on them.