What is a 'quotation' in insurance terminology?

In insurance terminology, a 'quotation' refers to an estimate of the premium that an insurer might charge for a specific risk. This estimate is based on various factors such as the type of coverage requested, the risk profile of the insured, and any underwriting guidelines that the insurer follows. The quotation serves as a preliminary offer, allowing prospective policyholders to understand the potential cost of insurance before committing to a policy.

The other options do not accurately define a quotation. A detailed policy document outlining coverage terms describes the actual insurance policy that is issued once an agreement is reached, rather than an estimate. The final cost of a premium after negotiation refers to the result of discussions between the insurer and insured but does not represent the initial stage of obtaining a quote. A refund amount from the insurer to the insured relates to a reversal of payment, rather than an estimation of a premium. Thus, the correct understanding of a 'quotation' is fundamentally tied to providing an estimated premium, making it essential for prospective clients in evaluating their insurance options.