it is the buyer's responsibility to pay, the seller has the rest.
the sell must insure the package gets to the buyer. if it never arrives, they are responsible for making finding out what happened to it/filing the insurance if there is any (some shipper's only the seller can make a claim)/reimburse the buyer when appropriate.
file your paypal dispute, and if he has no proof of shipping/tracking number/whatnot, it probably will be decided in your favor.
I can't imagine why people would ship something without insurance these days. thats why i refuse to even use USPS.
I've filed one before with a buyer that had next to no communication and a huge delay. It took almost a month to get the item, but it seems like filing the claim was the only thing that got his lazy butt moving. But it was the only time i've even gotten a product after a dispute, mostly its just refunds.