On Littlebiggy you have the protection of escrow, so if a rogue vendor were to try scam you, escrow will have your money, not the scammer.
The fact that the vendor hasn't ghosted you yet it either a good sign, or a sign they want to scam you for more money. I can't comment specifically as I don't know who you're dealing with, but you will most likely have to cut your losses. What is insurance money? That is not a thing. Sounds like a scam right enough. Don't send them anymore money, that's for sure.