I've just finished a long and unproductive call with Paypal I'd like to tell you about that may be of help to any other Ebay sellers...
Some background....A buyer in Russia bought some film from me, I shipped it via priority mail. The buyer doesn't have the film yet and the USPS website shows the package as having left the USA, it was sent on the 21st November and is overdue by my estimate.
The buyer has filed a claim and the funds are on hold, I spoke to paypal who informed me that since the package was sent uninsured I am liable for any mishap till it arrives in the hands of the buyer and is marked as 'delivered' whether they pay for/ask for or want insurance or not.
It makes no difference that I have physical proof of shipping nor that the buyer didn't want insurance I am still on the hook. Apparently its the same policy for items here in the US as well.
Whether the buyer wants insurance or not, complains about high shipping costs etc you HAVE to charge insurance to cover your @ss as paypal will in all likelihood charge me or you for the loss of the package. Yet another reason why I damn well hate that f&**#ng company!