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Questions about a return request

Hi....

 

I sold a perfectly good precision tool sharpening system, packed it well, and shipped it promptly to the buyer.  I just received a return request stating that the product was damaged in shipping and that it is unusable.  Can anyone give me advice?  The replacement value is over $700 but sold in the $450 range.  Shipping was also expensive.... around $70.  

 

1) Is there no insurance on shipped goods through the USPS?

2) Does the buyer pay for shipping?

3) What recourse do I have now that I don't have the sale or a usable product to sell?

 

Please help

 

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