Postal insurance is for the buyer to pay, if the buyer doesnt pay for, or ask for insurance then the seller doesnt pay the extra for the insurance, the buyer is taking the risk by not insuring the item, not the seller!

As you can prove you posted the item to the buyer, then as far as im concerned you have fulfilled your duty as the seller and anything more is the responsibility of royal mail or the buyer, so its either a refund from the royal mail or the buyer takes it on the chin and puts it down to experience.