Sorry that this happened to you and your customer. Hopefully it turns up.
Like many others here, I used to pay extra to insure some of the higher dollar items I was shipping out from time to time. Then I started wondering if it wasn't adding more of a temptation for the package to be "lost". I also started doing the math, and if I just started putting that extra fee back in my own pocket every time, It'd likely cover the 1 out of 1000 packages that might not show up. Add that to the amount of horror stories I've heard about denied claims, and it just didn't make sense to pay extra for additional insurance.
I think Priority Mail comes with an automatic $50 or so, so I kind of figured that at least that would cover some materials and a new shipping label if I could even get them to pay out.
It's encouraging to hear that appealed claims have at least some what more of a chance of getting approved, even if only partially.
All that said, I do ship hundreds of packages through USPS every year, and I can count on one hand the number that didn't show up. Out of those, one was ultimately returned to me and marked "undeliverable to addressee" or something like that, and all but maybe one of the others finally made it to their destination, usually after I had already sent out a replacement.
FWIW, I no longer add insurance, I typically use USPS priority packaging, I tape all "openable" sides securely, and I don't list anything other that my personal name and address on the packaging. I make it as plain and unimportant looking as I possibly can. If it's a heavier item, I also pad the inside so that it moves very little if at all. Maybe it's overkill, or maybe I'm just lucky, but so far so good (mostly).
