One note, you need signature confirmation for anything above 750 CAD total. Meaning, it could sell for less than $750, but if taxes and shipping bring it to $750+, it is required.
eBay does not require insurance, but if you don't get it and the package is lost they will require you to refund the buyer. So the way to look at insurance is that it is for the seller, not for the buyer.
There are no cheap insurance rates with the major carriers, as far as I know. For example, it cost about $130 for me to send five collectible hockey jerseys between two major Ontario cities because the total value was $2500. I had to split them between two packages because the max insurance was $1000, which means I had to pay two shipping rates and two signature confirmation rates. I left the outstanding $500 uninsured because it wasn't worth it to pay another $50 for a third parcel. Shipping with most carriers is between $3-$5 per $100 insured. I don't believe Canada Post has the same insurance limits, but they aren't currently running.
With Canada Post, if you print the label using their online Snap Ship platform, you can do things like mark the item as card for pickup. This might make you feel more secure with under insuring a package because you know it won't be delivered to the wrong house, or left alone on a porch. Technically, I think once it is marked delivered you are in the clear, but this would at least give you some added piece of mind.
You can look into both Chit Chats and Stallion. For orders to the USA, Chit Chats will allow you to insure up to $300 USD (about $400 CAD) for only a few dollars. Their insurance goes through a third party broker. I cannot comment on how likely you are to receive a settlement. Stallion offers very cheap insurance rates. I don't know off hand what their limitations are. The only hitch with Stallion is that the insurance is only useful if you ship with them on a regular basis, because the payout comes in the form of Stallion credit, not cash. Meaning, if you lost a $1000 guitar, they would give you $1000 worth of shipping credit. This won't be an issue for a high volume shipper, but it would be an issue for just about everybody else.
I am unfamiliar with third party insurance rates, but these might be your best option if they are reliable and can insure items for less than what UPS, Fedex, or Canada Post charge.
If you are shipping larger items like guitars during the Canada Post strike, you may want to stick with UPS and Fedex because they have shipping calculators integrated with eBay. If you use flat rates, you risk getting hit with an order from a rural or far out area that would have an excessive shipping charge beyond your flat rate. If you use calculated rates, you can add a flat rate handling fee to cover what you expect the insurance and shipping confirmation to cost.
