>>>Who gets paid from claim -

Only the person who shipped the item and bought the insurance may file a claim and get paid.

This is why I keep saying that a buyer who opts to pay for insurance is insuring absolutely nothing. It is the sellers responsibility to deliver the item.

My favorite sellers are those that put right in their auction that "they will not be responsible for lost or damaged items" but they accept PayPal. Clearly, they have never read the PayPal agreement.