Ask for a picture of the box you shipped it in
https://www.dropbox.com/s/1wnavvjp1cewjxm/IMG_20160526_165505726.jpg?dl=0
It’s the buyers responsibility to pay for insurance, if desired
So PayPal won’t judge in his favor if he makes a claim? His motives are revealed by asking for $20 instead of a replacement box. Its like asking Solomon to cut the baby in half.
This is totally on the buyer as long as you made clear insurance was optional. I purchased a MISB Blacktron I Meteor Monitor and the box was crushed in shipping (one of the few times that’s ever happened to me). So I filed a claim with USPS, sent pictures, described the problem, and received a refund.
I’m guessing this guy is upset that the box got damaged during shipping and he didn’t have insurance.