... emailing the guy, explaining the fact that THEY chose not to purchase insurance BUT you will compromise and refund 50%, if he balks go 100%.

I believe the seller has the requirement to deliver the goods or take the loss in the case of a business. When you deal with an individual (non-business) and the terms are spelled out (offering insurance) it gets gray fast.

I take the risk up to a point and if the item carries enough value I build in the added costs and ship 'free' (because costs are built in). Easy to give advise "After the fact".

I say compromise and cut your loss if possible, offer 50%. Then send counterfeit money!

Actually the right thing to do is send s refund... but I'm always a skeptic at first.