LOST PARCEL

I posted an item to a buyer on the 7th Oct they still have not received it,I have checked tracking and has been it transit for 2 weeks only has to go from NSW to VIC.I rang AusPost today and was told they would investigate but if it is deemed lost then to bad I should have taken out cover.Needless to say I was not happy they lost it not me why should I be out of pocket,the buyer has been extremely good about it and I have told them will refund,just doesn't seem right AusPost lost it they should be held responsible.Can I recover my money from Paypal?