I don't understand this whole insurance bit. what gives them, UPS, Fedex, USPS, the right to misplace/lose/damage your package. when you pay to ship something, you pay for them to get it to the location. I would think you could take them to small claims court. Sure it's more of a hassle, but I don't see how you could lose.
If the item is under $250, you win the Paypal dispute. If the item is over $250, you lose.
And whether or not you had insurance is irrelevant. If you had filed a claim, USPS would just say look at the status, the package was delivered. Claim denied.