EQC Minister Megan Woods says it could be 12 to 18 months before liability over the "on-sold" issue is established.

The Government's disaster insurance agency plans to increase its liability limits by half, which will increase EQC insurance levies by about $70 – and it's unknown whether this will hit homeowners in the pocket.

The Earthquake Commission (EQC) will increase its liability cap on residential buildings to $150,000 plus GST, up from the current cap of $100,000 plus GST, and extend the time people have to make a claim from three months to two years.

It will also stop providing cover for contents. Currently it offers contents cover up to $20,000 plus GST.

EQC provides limited insurance cover for those affected by natural disasters, including earthquakes, landslides and tsunamis, as long as they have private home insurance policies that include fire cover. If the damage is worth more than EQC's cap, the agency pays to its limit and the claim is passed to private insurers.

EQC Minister Megan Woods said the changes, which will be formally made to the EQC Act, were expected to come into effect on July 1, 2019.

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She said they would "simplify and speed up the claims process" and resolve issues with the act that had been identified by the Ombudsman and the Canterbury Earthquakes Royal Commission.

"These are widely agreed, common sense changes that can be made before the independent inquiry into EQC.

"I've asked for them to be brought forward so that, if the worst did happen and we had a major event shortly, these changes will have been made."

SUPPLIED Insurance Council chief executive Tim Grafton said the changes were a positive step, but there was more work needed around claims settlement.

To fund EQC, those with private insurance pay 20 cents plus GST for every $100 of home insurance cover they have, which is capped at $276 a year. This levy charged by private insurance companies and passed on to EQC.

A Treasury spokesman said the overall impact of the changes was that EQC would insure $30,000 more per household – $50,000 more building cover and $20,000 less contents cover.

He said the current 20 cent per $100,000 premium rate would apply to the extra $30,000, which would increase the annual levy maximum to $345 annually – an increase of $69 per household.

It was not yet known whether insurance companies would absorb some of this extra cost, as the changes meant their risk would decrease by $30,000, or whether the increase would be passed on to the public.

Insurance Council of New Zealand (ICNZ) chief executive Tim Grafton said each insurer would make its own decision about appetite for risk and how to price it, taking into account a range of factors.

National party EQC spokesman Stuart Smith said extending the claims period would prove "incredibly expensive and problematic" and would likely cause "significant increases in costs to policy holders".

He said after the Canterbury earthquakes there were thousands of aftershocks, many of which were considered separate events, and the extended period would confuse how damage was assigned to different events.

EQC has been regularly criticised for its response to the Canterbury earthquakes in 2010 and 2011, including poor damage assessments and shoddy repair work through its rebuild scheme, which was managed by Fletcher Building. There are still around 2600 claims outstanding, with hundreds each year going over EQC's cap and being passed to private insurers.

An inquiry into EQC's response is in the pipeline. A terms of reference for the investigation is being worked on by Government staff.

Woods said removing contents insurance cover would free up resources when responding to a disaster and help reduce delays resolving residential building and land damage claims. Talks with private insurers suggested contents cover would still be available "at a reasonable cost".

The timing for the planned change is based on the time it takes for changes to be made within the New Zealand legislative process.

Grafton said the changes were "the first step" in improving EQC's responsiveness to major disasters. The ICNZ was hopeful the EQC inquiry would lead to further change, he said.

The cap increase acknowledged there had not been a change to the level of cover since 1993 and changes to information sharing with insurers would assist in settling claims, Grafton said.

But there was further work required around the management of claims: "We believe insurers should manage and settle all claims, including those under cap, as agents for EQC," he said.

"It's insurers who have the relationships with customers and the bulk of resources and will already be involved in settling contents claims in any event."

This approach was used after the November 2016 earthquake. Grafton said settlements for that quake had "progressed far more smoothly and efficiently" than the Canterbury claims.

A spokesman for Woods said the minister wanted the process to be covered in the independent review, as they wanted to see what had worked and what did not ahead of legislative changes.