I've never been burned - but I have my auctions setup so "bad" bidders aren't allowed to bid on my auctions. And if I post an item which can be sold worldwide - I make it damn clear the item is shipped without insurance or tracking unless they want to pay for it [most people don't].
I will only accept Paypal payments and try to keep it to verified addresses. There has only been a few non verified - but so far no problems.
Accurately try to describe and include at least 1 photo of what you are selling - include additional photos if necessary [ie: scratch on the bottom of a laptop]. Make sure you verify the item works [and note this in your auction]
If you are selling without any refund - add NO REFUNDS unless stated in the auction - everything is sold AS-IS.
State the item will be well packed to prevent physical damage during shipment and that you won't ship anything that is defective [unless stated in the auction]
Insurance coverage is suggested in case physical/environmental damage happens or is lost during shipment. International 1st class packages are automatically insured - but I have no idea how the claims process works. Knock on wood - USPS / UPS / FedEx haven't lost a package yet. 🙂
State how long after payment is received when you will ship the item out [1-3 business days is a good rule]
If you accept returns and shipping costs were free - note that the seller agrees to pay to return the item in the same box/packing material it was originally sent.
MOST IMPORTANTLY - add a comment to contact you about any questions regarding the auction
Unless you have access to boxes, packing material, and tape - add a few $$$ to the shipping costs [or add this to "handling fee"].
Finally - be prepared to be screwed over by ebay's and paypal's FEES. Ebay takes their cut and paypal also takes their cut. This is why you add a few $$$ to the shipping costs... the higher the amount, the more fees ebay/paypal take. 🙁