You file the dispute for an item not received.
Next, if you have not got your item, or a full refund from the seller, you must escalate the dispute into a claim. You have 20 days to to that from when you filed the dispute.
Next, paypal will determine the claim. They say that they finalise claims within 30 days from when the dispute was escalated into a claim.
If you buy an ebay item, and pay to the paypal account that was linked to on the ebay listing then you are covered for either �150 or �500 maximum, depending on the level of cover that was on the listing.