what is the proper protocol

Nhtran - I disagree. I suggest you read the contract you enter into with the shippping companies. If you're the sender, you own it, not the receiver. That is the contract is between the Sender and the shipping company (ie UPS, Fedex). They will not even recognize nor talk to the buyer/recipient of the package.

Yea, my statement may have been an exageration. They will accept the initial claim filing, and they certainly need to and do talk with the buyer to assess the damage, but they won't go further than that nor send the money to the buyer. At least this has not been my experience. I've been on the receiving end of 3 damaged packages from UPS (2 amps, a subwoofer) - whenever I called UPS to inquire about status they referred me to "the shipper of record" (ie the seller). If they do more than this, perhaps they have changed their practice of late?

FEDEX on the other hand has a process where the seller can transfer authorization to the buyer for all claims. This requires a letter from the seller to FEDEX authorizing the buyer to handle the claim and receive the money. I'm not aware that UPS has a similar process, though they might.

Buyer and seller come to agreement on price, buyer pays, seller sends package and it never arrives or arrives damaged. Seller should insure that it was shipped safely packaged and insured. Seller is responsible to file claim and to make good on refund. Time allowed is negotiable within reason between parties. If seller disagrees buyer should turn dispute over to paypal, credit card co., or post office (if p.o. money order). From my experience if buyer did not receive goods they will refund money to buyer regardless of insurance. Damaged goods are more complicated (as to shipping item back and who gets refund) but the end result will tend toward the same result of buyer receiving refund. Sellers insure your packages. Seems to be more of an Ebay problem cause of trying to save by not buying insurance. Especially on lower priced items. Think I got the basics right. I know it can be more involved. When in doubt use the golden rule. Most cultures have a version of it so it must be a pretty solid standard!