(1) An officer or agent of this state or a person or persons having charge of a state owned and state used building or property of the state shall not pay out any public moneys or funds on account of an insurance against loss by fire, lightning, windstorm, explosion, riot, riot attending a strike, civil commotion, falling aircraft, hail, except this does not apply to growing crops, and smoke, caused from faulty operation of a heating plant using oil or gas fuel, or shall not in any manner contract for or incur an indebtedness against the state on account of an insurance upon any of the buildings, furniture, fixtures, or property of any kind belonging to the state, or against liability arising or that may arise under Act No. 317 of the Public Acts of 1969, as amended, being section 418.101 to 418.941 of the Michigan Compiled Laws, except in a manner provided in this act. If a state agency which has charge of the property determines that state owned properties in a single building represent an abnormal concentration of values, or are without adequate fire protection, or are highly combustible or highly inflammable, the director of the department of management and budget, after review, approval, or modification of the determination by the state agency, and after approval by the state administrative board, shall arrange for the insurance of the property against the perils named in this section in companies authorized to operate in the state.

  (2) The state administrative board, after an investigation as it considers necessary, may direct the director of the department of management and budget to call for bids and purchase deductible or catastrophe fire, lightning, windstorm, explosion, riot, riot attending a strike, civil commotion, falling aircraft, hail, and smoke insurance, covering any or all state property, with insurance companies duly authorized to do business in this state. An amount sufficient to pay the premiums on all insurance authorized to be purchased from private companies under this section is appropriated from the applicable fund.