I had a situation like this once, it was for 4 boxes of Finest. Roughly $400US worth (insured for the same).
It was sent surface mail, when I asked for airmail, but they said it was too much and "just sent it surface"... Anyways...
I explained to the seller after a month that I'd need to file PayPal and should it arrive, we cancel or I send the $ back. He was cool. Said I'd need to sign a form from him stating that it didnt arrive, so he could claim his insurance on his end.
The forms arrived, and I held on to if for a final week, which in turn the boxes arrived.
I emailed him straight away and cancelled the PayPal claim. He got paid, I got order.
Same will happen for you mate.
If they didnt insure it for the appropriate amount, it's not your loss, it's seller's responsibility to ensure they're insured......