Typically under the laws of all states in this country, the responsibility of an item lost in the mail deposited by the sender is the sender's responsibility until the person who is to receive it has the item in hand unless there is a written agreement to the contrary.It is entirely possible that the seller will refuse to replace the lost item. If that is the case, I would cancel payment for it. As a safeguard, I would process the claim since the seller indicates that it will not.