It's difficult to comment without seeing the ful t&c. For example, if an item is prohibited from carriage no amount of insurance would cover it.
It seems unlikely that watches are prohibited, but carriers often list items that are allowed, but won't be protected against loss or damage - which is likely to include valuables. But this restriction can often be lifted by selecting an option for insurance. Is it possible that you misread the t&c?
In any case, as papso22 pointed out, why buy a delivery service through eBay? Even if an item is covered, this makes the procedure to claim more complicated. Personally, if anything is of sufficient value to be worth insuring I'd always use RM special delivery. But whatever service you use, always check the t&c.