Mike,
I haven't read all the responses, so forgive me if someone has already suggested this....is the chip one that you might be able to buy a replacement for, for less than the $55??

Also, do you clearly state in your auctions that you will not be responsible if the seller doesn't take insurance? If you do, I'd evaluate the buyers feedback before making a decision. Personally (as a buyer) if I elected not to take insurance, I'd never ask the seller to cover it. So....I'd say, maybe, split the loss with the buyer.