I initially agreed with OP that the buyer is at fault here and should refund if things don't get resolved. I also felt that if he lost his money and the knife because of the buyer's error that the negative feedback was warranted. But he's since gone silent and has not commented on the status of his insurance claim nor (that I can recall) whether he appealed to PayPal on the seller protection. If he hasn't done either of those things he hasn't done enough to resolve the situation for both parties.