I am in the camp that believes an item belongs to the seller until it is properly delivered to the buyer in the as-described condition. All shipping/insurance issues are the seller's, in the absence of a prior agreement with the buyer to the contrary. I would promptly refund the buyer for goods lost in shipping, as soon as it was reasonably determined the item was lost. This highlights the importance of using a shipping method with tracking for all but very low cost items.
