iirc you said ealier (so i don't have to read the whole thread again) that you have around 500 positive feedback, giving you 100%. i freely admit that i look for the 1 negative BUT it is more important i think to look at the comment regarding that bad feedback, because in this case 1 in 500 is nothing and i would put it down to there are atleast 50 numpties in every 500 people you meet in the world let alone online. i think the response to the negative feedback tells you more about what went wrong and how it was dealt with.
i looked at the negative feedback of a seller for something i was interested in buying a while back, the buyer had written "item never posted and ignored emails" the seller responded with " you are a f***ing knob!" tells you more about the seller i think in that case.
my long drawn out point is judging by what you have written on here and to that guy you are in the right but your response to his feedback must be polite but firm and get the point over while coming across as a reasonable person, and that is hard in 1 short sentence.
maybe something like
"item damaged in transit, proof supplied, seller refused the insurance before sending, offered deal, he refused, item still fully functional."