Indian companies are enthusiastically adopting AI, but directors overlook crucial D&O insurance exclusions. Insurers, wary of AI's unpredictable risks and unclear liabilities, are increasingly disclaiming coverage. This leaves directors personally exposed to "AI washing," exaggerated claims, and potential lawsuits, as governance lags behind adoption. Boards must meticulously inventory AI usage, establish formal governance policies, rigorously review D&O policies for AI-specific carve-outs, regulate employee AI usage, and exercise caution with internal AI tools. Failure to do so invites significant legal and fiduciary consequences, emphasizing that liability follows AI's unchecked integration.