Once upon a time, it was said that the $1.20 fee (wherever it is taken from) went to help fund A to Z, so Amazon may not be entirely self-insured when it comes to 3P sellers.

However, I only insure eBay packages when very valuable or fragile (the photos I use in my listing are proof of condition when shipped), or when the buyer requests that I do so - of course, on eBay insurance is paid for by the buyer.

I also insure direct sales if they are expensive. I am normally self-insured for those but every now and then I worry about some shipments more than others.

I do use DC on everything, and I routinely double check the progress of my shipments with it.

can you use the DC # for tracking purposes? 

In a way you can. All the USPS promises is to scan the package when they deliver it (hence it is called Delivery Confirmation). It isn't like UPS tracking where the package is scanned every time an employee touches it. Although USPS packages with DC are sometimes scanned during their journeys, you can't count on it happening.

I have found that the more expensive green DC seems to be scanned more frequently than eDC. Some shippers indicate highlighting the eDC with bright green increases scan rate, but I haven't done any comparisons.

However, with that said, I do use eDC on everything and I do check to see how things are going with the packages. Often the DC information is helpful for finding out where a package is, whether it has been delivered or not.

The DC number is also helpful on those rare occasions when a package seems to vanish off the face of the Earth - it provides a very specific identifier that seems to help the PO find the missing item eventually.