Lost FBM package with Amazon bought USPS label

I have an FBM order that has been delayed for 3 weeks now. I bought the USPS label through Amazon. The buyer wants me to ship out another or issue refund.

If I ship out another and the first one is lost, how do I claim the lost package with Amazon? I know if you buy the label from Amazon you are protected against lost packages but I have never had to use that benefit. Also, what happens if the first package eventually shows up? Then the buyer has 2 units and if he refuses to return it, what options do I have?