Never experienced that on either side of the transaction (knock wood!!). The first criteria would be that I'd want acknowledgement from the shipper that they considered the parcel lost. Then I'd expect that there would be a record of communication between seller and buyer stating that seller was refunding the buyer's money with the understanding that the buyer would not be receiving the parcel.
If the parcel was lost for good, then seller would work to be reimbursed by the shipping company. If the parcel was found, I'd want it returned to the seller if possible. If it arrived at buyer, I'd expect the buyer to either ship it back to seller, possibly at seller's expense, or to re-send the original payment and keep the unit.
I think I'd be satisfied as either the seller or buyer in the above. Obviously, I wouldn't want to have this happen as a buyer or a seller. Good communication and understanding, as always, are key. Everyone needs to remember that used gear, in the long run, saves them a lot of money, so a few extra dollars in shipping costs are a small price to pay.
I think the only thing that would mess with the above is if the amount in question was quite large. Still, I think the above puts more of the responsibility on the seller and, as a seller, its responsibility I accept.
