Postal insurance is protecting the seller not the buyer. Until the item is safely delivered - it remains the responsibility of the seller. If there should be an issue with the delivery, it is the seller who would need to deal with postal service and make a claim on the insurance - the postal service wouldn’t help the buyer directly, they would only deal with the party who bought the postage and insurance. Perfectly reasonable that both parties take delivery costs into account when agreeing a price though.
Paypal protection is another thing completely. It doesn’t provide any real guaranteed protection for the seller or buyer. The buyer can still chargeback a PayPal purchase via their credit card even if fees were paid for protection and there is proof of delivery. And if the buyer does not receive the item, they are not guaranteed to be refunded if PayPal arbitrarily decide they have no realistic chance of recouping the funds from the seller. This is in the T&Cs of their, so called, buyer protection. I found out the hard way a few years back. Needed to chargeback via my bank as Paypal refused to compensate for an unreceived purchased item. The fees are a nice little earner for Paypal though.
