Am I liable for lost item with paypal dispute?

Recently I shipped out a item for about $1,000. I shipped the item and the item's tracking number was never updated. So its pretty much lost by USPs. I shipped it to the confirmed address and with certified mail, which requires a signature. The buyer filed a dispute with me and right now its under investigation by paypal. Knowing paypals ';state of the art'; dispute system I am very worried about losing this dispute. I need someone to let me know what might or will happen or if anyone had dealt with this situation. I mean I shouldn't be liable right? I offered insurance in my eBay auction and the buyer didn't purchase it.