Andy what he might be thinking of is replacement cost.
While what you say is 101% correct, what happens in a situation where you buy sometning for a bargain [lets not start that thread again] its lost and now your replacement cost is significantly higher? In essence what you would be saying to the post office is hey, I don't want my money back, Replace the item.
I know what the post office answer would be but would that make it right.
Another point would be, Insurance is available I believe in $50 increments. If I want to insure sometning for $60, I have to purchase $100 worth of insurance. Why do I have to pay for $50 worth of insurance for $10 worth of coverage.
Just a question.