This information is directly from my husband's mother, who is a Post Master in good standing:

"This is awful. The best thing is to be persistent. It doesn't say how much they insured it for. The very least the PO owes the insured value plus postage and fees. Some business have private insurance on items mailed. Like jewelry stores. Our insurance is limited in value unless sent registered or Express mail.
They can ask or contact their local postal consumer affairs office.
Continue complaining and pushing for reimbursement. Maybe even postal inspector."