Have you had to use this insurance and be paid for what was claimed?
There is the problem. I shipped a copy of one of Eddie Robin's books (typical asking price on Ebay $300 to $900) by USPS. I asked for $250 of insurance. "Just remember, sir, that you will have to show a receipt for the value to file a claim." I went self-insured.
As for the airlines.... I had a "lost" bag. It happened to have a laptop in it. "I'm sorry sir, we can only give you $170 for the clothes and toiletries you have indicated. Computers and other things of significant value are not covered under lost luggage."
I think it's useful when buying the additional insurance to ask, "If it is lost, what do I need to do to file a claim?" I think they are going to ask for receipts or an appraisal for anything over $100 or so and may require some proof that the item was in the luggage. Here is some useful info from the Forbes site I found in a quick search:
Take a Picture
If you want your lost luggage insurance to cover all of your belongings, take a picture or video of your luggage before leaving. Then take an image of everything you’re packing before you put it in the bag. It may sound silly, but when you file a lost luggage claim, one of the first questions is: What does your bag look like. Well, what does your bag look like? If you said, “It’s a black bag with wheels,” congratulations. So is everyone else’s. Get a close-up shot with the luggage name and model.
Baggage Coverage is Limited
Most travel insurance plans cap the insurance company’s liability at $100 to $500 per item, with a total maximum that could be anywhere from $500 to $3,000 per person, depending on the policy. So if you have expensive items like a laptop computer or jewelry, you don’t want to put them in your checked bag or leave them in your hotel unattended.
“For expensive items valued over $1,000, you can insure your luggage through your homeowner’s insurance or the credit card you used to buy the item,” says Kasara Barto, a spokesperson for Squaremouth, a travel insurance provider.
From the last line, I think there is only a small chance that normal travel insurance will cover a $5000 cue stick.