In any/every circumstance I've been in with domestic shipping, insurance is NOT the buyers responsibility, it's the shipper's.  In my eyes, 100% you should refund this buyer, as he did his obligation in paying you.  Your obligation is making sure the cue gets from point A to point B.  If you wanted the buyer paying shipping and didn't want to cover the insurance I would have demanded insurance covered, or not sold.
USPS is batting .1000 right now with being late.  They've been late delivering my last 3 cues that were overnighted.  Hopefully this cue wasn't too expensive, but from experience, don't ship ANYTHING without insurance right now, as it's almost a guarantee to be late at best.
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