Agree with Rich, I have a shop on ebay and sell paperweights to feed my sci-fi and Marvel habit and the insurance is for the seller's benefit rather than the buyer incase of wrongful chargebacks, but your seller has really let you down OP. Good luck, I hope you get your money back, it's obtaining money through deception and in the UK the police would be involved.
Still report them as a non performing seller through ebay here
http://pages.ebay.co.uk/help/contact_us/_base/index_2.html?item=&topic=index_2&continue=Continue+%3ESelect problems with sellers or buying, you paid but didnt receive the item, (continue) and then click on the 'email us' link and fill in the details. Dont forget to add such details as they told you wait for two months taking you out of your protection time limit. If the seller get's too many non-perfomance strikes he's removed from ebay, like a non-payer if they fail to pay too many times (twice I think).