>>>So you're saying that even though the buyer declines insurance I should insure the item?

That is absolutely correct assuming that you don't want to bear the risk of loss.

>>>Should I always include insurance and delivery confirmation in the shipping cost and require the buyer to pay it?

That is the choice you have to make and it will certainly depend on the value of the item being shipped. That is exactly the reason many sellers give for their seemingly high shipping and handling fee (of course, there are some that charge it and then just drop it in the mail because it is easier to simply replace the item).

>>>I wonder how long a thread that would create?

I don't know why it would create a long thread. If a seller is shipping a $1 item, it isn't a big deal, if the seller is shipping a $500 item, then he better cover his arse....