Warren Buffett's Berkshire Hathaway fund has pocketed $224m (£113m) in a bet that Florida will not be hit by devastating hurricanes in the coming months.

That is the amount the state has agreed to pay Berkshire upfront so the fund can come to its rescue if hurricane damages top $25bn in this season, which runs from June 1 to November 1.

If damages do exceed that figure Berkshire will immediately buy $4bn in 30-year bonds issued by the state and that money will ensure Florida does not run into any cash flow problems as it begins any clean-up.

Florida will have to buy the bonds back and the interest rate over the 30 years is 6.5%.

State officials have agreed to the deal, even though they admit there is only about a 3% chance of damages going so high, because they believe the credit crunch would limit their access to funds through traditional financial markets if this a particularly bad hurricane season.

Florida has not been hit by a hurricane for two years but damages in 2005 totalled $11bn and in 2004 the amount was $16bn. However, hurricane Katrina which bypassed Florida as it rolled across the Gulf of Mexico did $41bn worth of damage to New Orleans and environs.

Because many of America's insurance giants are unwilling to insure properties in Florida and others will only do so at exorbitant rates, the state has had to be creative in providing insurance, particularly to people living near its coastlines.

It formed its own insurance company, Citizens, and created a re-insurance fund with below-market rates to entice corporations to stay in the state and offer property owners insurance.

That fund is on the line for $29bn should a mega-hurricane hit Florida. However, it has less than $8bn in cash. Berkshire's $4bn would give the state breathing space as it trawls for help.

The Berkshire deal was pushed through by the governor, Charlie Crist, but Florida's CFO, Alex Sink, was unhappy even though she voted in favour. "Warren Buffett did not become a multibillionaire by not doing good deals for himself. We've got both hands tied behind our back," she said, referring to the fact that Berkshire was the only company that responded to Florida's request for proposals.

Meanwhile the National Climate Prediction Center said in early June conditions were in place for another active hurricane season with an above-average number of storms. There should be 12 to 16 named storms this season, and that six to nine of those will become hurricanes.

Tropical Storm Bertha, the first of the season, this week formed in the Atlantic but is not thought to be a threat to the US.