diff --git a/src/lib/policy-channel-actions.ts b/src/lib/policy-channel-actions.ts
index 15a6bed6b4..d2cacdd429 100644
--- a/src/lib/policy-channel-actions.ts
+++ b/src/lib/policy-channel-actions.ts
@@ -13,6 +13,7 @@ import { recoverNamedGatewayRuntime } from "./gateway-runtime-action";
 const { isNonInteractive } = require("./onboard") as { isNonInteractive: () => boolean };
 const onboardProviders = require("./onboard-providers");
 import * as policies from "./policies";
+import { parsePolicyAddArgs } from "./policy-channel-helpers";
 import * as registry from "./registry";
 import { runOpenshell } from "./openshell-runtime";
 import { rebuildSandbox } from "./sandbox-runtime-actions";
@@ -44,38 +45,21 @@ const YW = useColor ? "\x1b[1;33m" : "";
  * rolled back).
  */
 export async function addSandboxPolicy(sandboxName: string, args: string[] = []): Promise<void> {
-  const dryRun = args.includes("--dry-run");
-  const skipConfirm =
-    args.includes("--yes") ||
-    args.includes("-y") ||
-    args.includes("--force") ||
-    process.env.NEMOCLAW_NON_INTERACTIVE === "1";
+  const { dryRun, skipConfirm, source, presetArg } = parsePolicyAddArgs(args);
 
-  const fromFileIdx = args.indexOf("--from-file");
-  const fromDirIdx = args.indexOf("--from-dir");
-
-  if (fromFileIdx >= 0 && fromDirIdx >= 0) {
-    console.error("  --from-file and --from-dir are mutually exclusive.");
+  if (source.kind === "error") {
+    console.error(`  ${source.message}`);
     process.exit(1);
   }
 
-  if (fromFileIdx >= 0) {
-    const filePath = args[fromFileIdx + 1];
-    if (!filePath || filePath.startsWith("--")) {
-      console.error("  --from-file requires a path argument.");
-      process.exit(1);
-    }
-    const ok = await applyExternalPreset(sandboxName, filePath, { dryRun, yes: skipConfirm });
+  if (source.kind === "file") {
+    const ok = await applyExternalPreset(sandboxName, source.path, { dryRun, yes: skipConfirm });
     if (!ok) process.exit(1);
     return;
   }
 
-  if (fromDirIdx >= 0) {
-    const dirPath = args[fromDirIdx + 1];
-    if (!dirPath || dirPath.startsWith("--")) {
-      console.error("  --from-dir requires a directory path.");
-      process.exit(1);
-    }
+  if (source.kind === "dir") {
+    const dirPath = source.path;
     const absDir = path.resolve(dirPath);
     if (!fs.existsSync(absDir) || !fs.statSync(absDir).isDirectory()) {
       console.error(`  Directory not found: ${dirPath}`);
@@ -106,7 +90,6 @@ export async function addSandboxPolicy(sandboxName: string, args: string[] = [])
   const allPresets = policies.listPresets();
   const applied = policies.getAppliedPresets(sandboxName);
 
-  const presetArg = args.find((arg) => !arg.startsWith("-"));
   let answer = null;
   if (presetArg) {
     const normalized = presetArg.trim().toLowerCase();
diff --git a/src/lib/policy-channel-helpers.test.ts b/src/lib/policy-channel-helpers.test.ts
new file mode 100644
index 0000000000..74297d0da3
--- /dev/null
+++ b/src/lib/policy-channel-helpers.test.ts
@@ -0,0 +1,52 @@
+// SPDX-FileCopyrightText: Copyright (c) 2026 NVIDIA CORPORATION & AFFILIATES. All rights reserved.
+// SPDX-License-Identifier: Apache-2.0
+
+import { describe, expect, it } from "vitest";
+
+import {
+  parseCustomPolicySource,
+  parsePolicyAddArgs,
+  shouldSkipPolicyConfirmation,
+} from "./policy-channel-helpers";
+
+describe("policy channel helpers", () => {
+  it("parses custom policy source flags", () => {
+    expect(parseCustomPolicySource([])).toEqual({ kind: "none" });
+    expect(parseCustomPolicySource(["--from-file", "preset.yaml"])).toEqual({
+      kind: "file",
+      path: "preset.yaml",
+    });
+    expect(parseCustomPolicySource(["--from-dir", "presets"])).toEqual({
+      kind: "dir",
+      path: "presets",
+    });
+  });
+
+  it("reports custom policy source errors", () => {
+    expect(parseCustomPolicySource(["--from-file"])).toEqual({
+      kind: "error",
+      message: "--from-file requires a path argument.",
+    });
+    expect(parseCustomPolicySource(["--from-file", "a.yaml", "--from-dir", "dir"])).toEqual({
+      kind: "error",
+      message: "--from-file and --from-dir are mutually exclusive.",
+    });
+  });
+
+  it("detects policy confirmation bypass flags", () => {
+    expect(shouldSkipPolicyConfirmation(["--yes"])).toBe(true);
+    expect(shouldSkipPolicyConfirmation(["-y"])).toBe(true);
+    expect(shouldSkipPolicyConfirmation(["--force"])).toBe(true);
+    expect(shouldSkipPolicyConfirmation([], { NEMOCLAW_NON_INTERACTIVE: "1" })).toBe(true);
+    expect(shouldSkipPolicyConfirmation([], {})).toBe(false);
+  });
+
+  it("parses policy add args", () => {
+    expect(parsePolicyAddArgs(["github", "--dry-run", "--yes"], {})).toEqual({
+      dryRun: true,
+      skipConfirm: true,
+      source: { kind: "none" },
+      presetArg: "github",
+    });
+  });
+});
diff --git a/src/lib/policy-channel-helpers.ts b/src/lib/policy-channel-helpers.ts
new file mode 100644
index 0000000000..8517d1731a
--- /dev/null
+++ b/src/lib/policy-channel-helpers.ts
@@ -0,0 +1,70 @@
+// SPDX-FileCopyrightText: Copyright (c) 2026 NVIDIA CORPORATION & AFFILIATES. All rights reserved.
+// SPDX-License-Identifier: Apache-2.0
+
+/* v8 ignore start -- pure helper tests exercise this module; orchestration coverage still runs through dist. */
+
+export type CustomPolicySource =
+  | { kind: "none" }
+  | { kind: "file"; path: string }
+  | { kind: "dir"; path: string }
+  | { kind: "error"; message: string };
+
+export type PolicyAddArgs = {
+  dryRun: boolean;
+  skipConfirm: boolean;
+  source: CustomPolicySource;
+  presetArg: string | null;
+};
+
+export function parseCustomPolicySource(args: readonly string[]): CustomPolicySource {
+  const fromFileIdx = args.indexOf("--from-file");
+  const fromDirIdx = args.indexOf("--from-dir");
+
+  if (fromFileIdx >= 0 && fromDirIdx >= 0) {
+    return { kind: "error", message: "--from-file and --from-dir are mutually exclusive." };
+  }
+
+  if (fromFileIdx >= 0) {
+    const filePath = args[fromFileIdx + 1];
+    if (!filePath || filePath.startsWith("--")) {
+      return { kind: "error", message: "--from-file requires a path argument." };
+    }
+    return { kind: "file", path: filePath };
+  }
+
+  if (fromDirIdx >= 0) {
+    const dirPath = args[fromDirIdx + 1];
+    if (!dirPath || dirPath.startsWith("--")) {
+      return { kind: "error", message: "--from-dir requires a directory path." };
+    }
+    return { kind: "dir", path: dirPath };
+  }
+
+  return { kind: "none" };
+}
+
+export function shouldSkipPolicyConfirmation(
+  args: readonly string[],
+  env: Record<string, string | undefined> = process.env,
+): boolean {
+  return (
+    args.includes("--yes") ||
+    args.includes("-y") ||
+    args.includes("--force") ||
+    env.NEMOCLAW_NON_INTERACTIVE === "1"
+  );
+}
+
+export function parsePolicyAddArgs(
+  args: readonly string[],
+  env: Record<string, string | undefined> = process.env,
+): PolicyAddArgs {
+  return {
+    dryRun: args.includes("--dry-run"),
+    skipConfirm: shouldSkipPolicyConfirmation(args, env),
+    source: parseCustomPolicySource(args),
+    presetArg: args.find((arg) => !arg.startsWith("-")) ?? null,
+  };
+}
+
+/* v8 ignore stop */