The Directors and Officers of companies may become liable to pay damages for wrongful acts such as failure of supervision of the affairs of the Company etc. Directors and Officers liability policy is therefore designed to provide protection to Directors and Officers of a Company against their personal liability for financial losses arising out of wrongful acts or omissions in their capacity as directors or officers. The coverage is granted in two parts under the insuring clause: (i) Company Reimbursement: Insurance of the Organization itself – Organization is entitled (and often obliged) by way of its articles of association to indemnify its Directors and Officers. However, the extent of this indemnity is strictly limited under the Companies act. The organization may only reimburse to the extent of legal costs expended and then only if the Director/Officer successfully defends that action. (ii) Directors and Officers: (a) Insurance of the Director/Officer – if the action against him is successful, then the Director/Officer is “on his own”. He is exposed not only to legal costs but to any damages which might be awarded against him. The organization will now of course be precluded from indemnifying him.(b) The second part of the cover (D&O) will now respond, provided that the Director/Officer has not acted in a deliberately dishonest manner. Fines and other penalties are not recoverable. As in the case of other liability insurance policies, the D&O policy is subject to compulsory excess and certain exclusions. Besides, the policy provides for Directors and Officers to comply with certain specified claim conditions. Many coverage are provided under the policy as Add-on extensions.