Insular Areas Policy Act - Establishes an Insular Areas Policy Council to coordinate the actions of the Federal Government with respect to the insular areas. Directs the Council to: (1) review the activities of Federal agencies with respect to the insular areas; (2) identify Federal funding priorities with respect to such areas; (3) review the "State of the Islands" report; and (4) determine the appropriate role of such areas in U.S. domestic and foreign policy and the effects of such policies on those areas. Requires the President to transmit a "State of the Islands" report to specified congressional committees that shall include data summarizing social, economic, and political conditions, a statement of current policy issues, foreseeable future developments, and recommended policy objectives for each of the insular areas. Directs the Secretary of the Interior to: (1) provide Federal agencies with assistance necessary to structure Federal programs or laws affecting insular areas to further the objectives of such programs or laws and prevent adverse impacts; (2) inform local governments of such areas of any Federal action which would affect such areas and solicit their comments and recommendations regarding such actions; and (3) assist in the development of priorities for, and levels of, Federal assistance for such areas. Authorizes appropriations.