At present, the EQC is responsible for up to $100,000 of damage to residential properties from a single event. Anything above that threshold becomes the responsibility of private insurers.
The cap has caused significant friction and uncertainty for homeowners affected by the Christchurch quakes.
Raising the threshold would massively reduce the interaction between EQC and private insurers, and was expected to lead to lower premiums being charged by insure companies.
Ministers proposed that EQC should not provide land cover after a natural disaster unless it was impossible to rebuild on the site.
That meant EQC would no longer cover land damage that had not affected the house itself.
It was also proposed that EQC would no longer provide contents insurance. Ministers said leaving contents insurance to private providers would enable the commission to focus on insuring homes and would eliminate uncertainty regarding contents claims.
Other proposals included a requirement for homeowners to lodge all EQC claims with their private insurer first.
The insurer would validate the claim before sending it to the EQC, in a bid to reduce "information churn" between the private sector and the commission.
Government was now seeking submissions on the proposals, before introducing a bill to Parliament in early 2016.
No current claims would be affected by the proposals.
