Hey Dan,
Don't look at insurance that way from the post office. It's no different than car insurance or health insurance. I could have a new car for what I've paid in car insurance, but I gotta have it. Same with health. The point is well taken though on $10 strikes, I never ask for insurance and never insure them. We consider this value "self insured". But, I always insure packages worth over $100 even if my customers don't ask. It's a cost of doing business that although rare, we have had to use. You hit the nail on the head as to how stuff gets "lost". It rarely does, usually it is a postal service employee who has helped themselves to the item. Postal Service is still better than UPS as far as theft/loss. I must say that the "click and ship" option with PayPal for shipping seems pretty safe since you can track it online.