We have been selling on eBay for years...
EBay will MAKE you refund the buyer. It doesn't matter whether you believe the buyer or not - as far as eBay are concerned you have failed to get the item to the buyer.
EBay will always side with the buyer - this is the only way to ensure that buyers carry on using eBay. This is to the advantage of sellers as well, otherwise they would not have any buyers.
This is how eBay look at it:
You are the one that packaged the item and chose the packaging that you thought appropriate.
You are the one that purchased the postage, therefore you are the one with the contract with Royal Mail.
Because you paid for the postage, you can claim for the loss/damage from Royal Mail. The buyer cannot do this.
This is why a seller should choose to pay for insured postage IF the item is one that is expensive or if they fear that the item may get damaged or lost. It is the responsibility of the seller to insure the postage if they need to, and to claim if the item is lost or damaged.
I often see eBay items where the listing allows the buyer to choose to insure or not by paying extra for eg Special Delivery etc - this is the sure sign of a seller who doesn't understand his/her responsibilities and who will eventually lose out. A buyer is not responsible for the seller's choice of postage options. A buyer should -rightly- always choose the cheapest postage option offered.
A seller should ALWAYS choose the correct level of postal insurance to protect themselves.