(1) The cabinet shall:
(a) Determine which state property shall be insured against loss by fire and other hazards; and (b) Insure with a responsible company or companies authorized to do business in Kentucky all property financed under a statutory amortization plan, to the extent of the lien indebtedness upon the property or to the extent of its reasonable value, whichever is the lesser.
(2) Any officer or agent of the state having control or custody of any property belonging to or controlled or used by the state or any agency of the state may, with the approval of the secretary of the cabinet, from the funds allotted to such agency, purchase insurance of an additional kind or kinds which cannot properly be covered in the Commonwealth's property and casualty insurance fund.