Since some folks here claim you can't offer optional insurance because of the UCC maybe he thinks he needs to charge that much to cover his rear on it.

Also he could be charging more to cover:

1. eBay fees
2. paypal fees
3. insurance
4. receipt of package delivery as required by paypal.
5. cost of packaging
6. gas to postoffice
7. cost of man hours/time spent to process transaction

Estimate $1 to each of those and pay yourself minimum wage to mess with it and I could see $10 being justified!

(not my auction - just giving you ideas of maybe why so much)