absolutely don't pay more than was stated in the auction.
I am with Swanky, the seller has to make sure it gets to you and if it doesn't you will win the claim. HOWEVER, to be on the safe side I would pay the original $5 in the auction for the insurance and then if there are any problems it is her fault for not listing the correct price, not your's.
Actually, I just looked at auction and under insurance I missed where it said $5.
That being said, it is HER responsibility to send it tracked and to get a signature confirmation on its delivery. It you do not get your package you will win any dispute. Insurance is a seller's responsibilty which is why any shipping and handling should already include this.
AND parcel post??????? really!