The Earthquake Commission will close its Canterbury home repair programme to all new customers and new repairs for existing customers on 1 June.
The programme covers repairs costing between $15,000 and $100,000.
The commission's general manager of customers and claims, Gail Kettle, said the deadline was for people who had not been ready for contractors to start work on their properties or those still negotiating with the commission.
She said a cash settlement was one option.
Ms Kettle said the deadline will not affect people who have confirmed a start date for repairs or whose properties may be more vulnerable to flooding.
However, an advocate for earthquake victims in Canterbury says the Earthquake Commission's deadline for people to settle claims in less than two months will leave them short-changed.
The spokesperson for the Wider Earthquake Communities Action Network (WECAN), Brent Cairns, said the deadline was not fair and would rush people into making decisions.
He feared that more people would end up with not enough money to cover the repairs needed on their home.