Steve's situation is painfully ironic in it's unlikelihood. Most international orders don't even have the option of insurance on shipping ("priority international" doesn't offer it). We used a US service and so the first leg could be insured. Same time, international payment options are extremely limited, and the method required just a dash of subtlety.
So, I've been putting in a lot of legwork over here for Steve (gladly, eagerly), and hitting a lot of brick walls. The process still isn't over; but we're into appeals here and presentations and inspections of damaged items and yada.
So, basically, the only package that USPS has ever lost/damaged for us in well over 500 of them, is one that normally couldn't even have been insured, and doesn't have the exact pedigree/papertrail that their ridiculously stringent rules ("outs") require. We've submitted all kinds of evidence of the transaction, the value, the history .. . and we may be denied because we don't have a "receipt", like you'd get from buying something at Walmart.
Long short, if you want to pay USPS for "insurance", you'd best make sure the item your shipping has a clear documentation of purchase behind it, and then you can get over the first hurdle in attempting to file a claim. (there are other hurdles, I'm sure of it . . . like rules about "proper and sufficient packaging". A long list of "outs" for claim denials.) Mailing anything that you didn't buy/sell w/ a receipt .. . grandma's wedding ring, yada .. . don't bother insuring it. (i.e. volumes of evidence per "value", comparables, published price are moot .. . must be a purchased item w/ receipt.)
My personal approach, in general, is not to pay for added/purchased insurance. Over time, in aggregate, the savings will pay for the one item I may lose. But it's not my place to recommend on this front; just to implement the customer's wishes.
Keep pushing! I've gotten them to pay for stuff they broke!
we're not giving up without a fight.
. . . been doing that.