Goodness me, some post offices tell porky pies or make it up as they go along.

Large letters are covered for compensation according to Australia Post lodgement forms/receipts.

As others may know Australia Post even retail their own pre-printed registered post small and large letter.

Both the pre-printed lodgement form/receipts that many use for letters and parcels and the tear off lodgement receipts with Oz products, outline registered post terms and conditions, including:

"compensation for loss or damage* to a limit of $100 is a part of the Registered Post service, in addition to postage charges incurred"

Among other things it also notes the exclusions such as: delay in delivery; bank notes: items prohibited etc etc