Ok, firstly let me say that I sympathise - and empathise - with The kreis. How can I not do? All the more so since this is a classic example of 'The Little Guy' vs the Greedy Multi-national Corporation . Kreisler, I've done the same thing myself - I'm sure we all have - and I hope you get a result out of this. Would you have had to sign for this package? If so, at least you have proof that you didn't receive it, which might help with Paypal.
That said, I have to be honest and admit that I also can see both sides here. Let's face it, ordering online always contains an element of risk, and whilst it might be understandable to want the seller to carry 100% of responsibility, it isn't necessarily practical to expect it. The sad fact is that stuff does sometimes go missing and the point that I think some people might be missing is that the seller doesn't do the delivering themselves. Here in the UK we're kind of resigned to this as it's sadly common for items to go missing in transit across town, never mind across the globe.
There are so many other pairs of hands, and so many ways for an item to go awol once a package has been sent and is into the shipping system, and as others have said, there is a limit to just how much a seller can do to ensure a package arrives. Yes, they could swallow every loss, but then their prices would go up. This way they're offering the customer a choice as to whether to pay a bit more for peace of mind. I actually think that, for all that we moan when things go wrong, Chinese sellers have spoiled us. We get low prices, free shipping (usually) and - most surprising of all - if we say that something hasn't arrived, more often than not we get a replacement or a full refund, and they take our word for it! This is astonishing when you stop to think about it, and I worry how they do it. I mean how low must their expenses (workers' wages!) be? I may be wrong, but I'd bet that Fenix USA have to pay a much higher minimum wage..
Of course we shouldn't have to pay insurance for shipping. As Lennart says, there is an element of encouraging crime about it, and apart from that, shipping insurance means we're basically paying twice for the same service. It's exactly like the 'extended warranty' scam; why should I have to pay extra money (quite a lot here in the UK) to ensure that I get a reasonable working life out of a product that I've already paid for? Extended warranty payments could be said to be encouraging built in product failure rates; as long as customers are aware of these breakdown risks and are prepared to pay to avoid the cost of repairing something that shouldn't have gone 'pffft!' in the first place, manufacturers (and retailers) have no incentive to improve QC or PWL (Product Working Life).
Bottom line is that *@%# happens, and sooner or later it's going to land on each of us to one extent or another. The simple question we have to ask ourselves is "Do I feel lucky?" If 'yes', I can save a few bucks by taking a chance. If not, I'll pay a bit more for peace of mind. I have never paid shipping insuarance, but then I've never had to swallow the cost of a lost item. Had this ever happened to me, or if I was ordering an expensive enough item I might pay the extra. Good luck, kreisler, hope you get your flashlight ;)