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"Even if you had the boxes, FedEx would likely claim insufficient packaging for anything less than the original Nissan boxes.” "noting that he packed the item and that he could have had FedEX pack it, making them much more likely/obligated to honor the insurance." You're 100% correct here, FedEx, UPS, USPS, they will mostly always claim insufficient packaging (even if though you thought you packed it well and showed pictures of the packaging). Insurance in my opinion is good for lost packages, not for damages. He is right about shipping it back first for a refund, if I were you I'd ship it back with tracking #. If you paid through PayPal and seller doesn't refund seller receives it, you could always dispute it with your credit/debit card and PayPal. Good luck.
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