I believe it's up to the seller regardless of what UPS does. As far as I know UPS will only pay claims to the seller and not the recipient.OMFG. Ups really, really blows sometimes.
So what happens if UPS refuse to pay for a replacement ? I would think whoever sold them to you would have some pull here maybe ?
As someone who sells a fair bit of stuff, I will just immediately issue a refund to the buyer and worry about filing claims later. Fortunately that's very rare when the items are packed well. I usually don't even insure packages for full value because it's cheaper to just eat the cost once in a while than to pay for full insurance on every package (not to mention the value of the time and effort it takes to file claims and whatnot). For most things, and particularly for large floor toms and bass drums I try to use FedEx ground whenever possible rather than UPS.