I say if they opted out of insurance, that's the gamble that they are taking and you are no longer liable once the postal carrier picks it up. It seems too fishy for me, and if I were the seller, as much as I'd want to work with them, I would tell them that it wasn't my responsibility.
A tough lesson learned for MoP.
And good on you for documenting everything. When you're dealing with high value shipments, you want everything you can get before you send it off to have proof of condition, for instances like this.