Of course the seller is going to insure the chip, who would send a $500+ item through the mail without insurance. "Oh, it never showed up? OK, here's your $500 back...." Can you imagine?

Priority Mail is $3.20, 1st Class would probably be $ .55 plus the cost of a bubble envelope, a savings of about $2.25, I reckon, without figuring in the fact that 1st Class envelopes are much more likely to be lost or damaged in the mail stream.

If there is an insurance claim, it will take AT LEAST 30 days, and probably much longer, to resolve the insurance claim. Insisting on Priority Mail, thereby raising the cost of the transaction by about 4/10 of 1%, does not seem unreasonable to me. In any event, its the sellers decision to make, just as it's the buyers decision to either bid, or walk away.