California Code, Penal Code - PEN § 2055

The Director of Corrections may, in his discretion, from time to time insure any or all products produced at any prison or institution under the jurisdiction of the Director of Corrections, whether the products are finished or unfinished, the materials from which such products are made or to be made, and the equipment necessary for the production thereof, against any or all risks of loss, wherever such products, materials, or equipment are located, while in the possession of the Department of Corrections and while in transit thereto or therefrom or in storage, in such amounts as the director deems proper.  The cost of such insurance shall be paid from the Correctional Industries Revolving Fund.