What is the coverage extension that increases building insurance amounts annually by a predetermined percentage?

The correct choice is Inflation Guard, which is a feature included in certain property insurance policies that automatically increases the coverage limits for buildings over time, reflecting inflation rates. This means that as the cost to rebuild or repair property rises due to inflation, the insured amount will also increase by a set percentage each year. This is important for maintaining adequate insurance coverage, as building costs can significantly rise over time, potentially outpacing the original policy limits.

The Inflation Guard helps ensure that policyholders are not underinsured, especially in the case of a loss where they would need to rebuild or repair their property at current market rates. This coverage extension is particularly valuable in long-term policies where inflation can substantially erode the value of the original coverage.

Other options mentioned may refer to different aspects of insurance or adjustments but do not specifically address the automatic annual increase of building insurance amounts in relation to inflation, which is the main focus of the Inflation Guard.