I hope this message finds you well, present circumstances excluded. Unfortunately, you cannot sue the US Postal Service in small claims court. The US Postal Service is a federal government entity, and as such, a state or municipal court cannot assert jurisdiction over them.
You will have to file a suit against them in federal court. Before you can sue a federal government entity in federal court you must notify them with what is called a notice of claim.
Their defense is going to be that they are immune from suit in the present case. In 28 USC § 2680(b), the government retains immunity for "Any claim arising out of the loss, miscarriage, or negligent transmission of letters or postal matter."
I think the way that you argue against this rather generic statute is to state that you had it insured. As a result, you are technically suing the insuring mechanism of the Postal Service.
At any rate, I would recommend hiring an attorney to potentially file the suit as federal claims and litigation is quite complicated. To that end, I recognize the monetary issue hiring an attorney would pose. It will be incumbent on you to do a cost to benefit analysis to see if it is worth it.
I wish I had better news for you, but I am obligated to tell you the legal reality of the situation.
Best wishes going forward with this issue and I appreciate the opportunity to assist you with it.
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