That is a _ton_ of merchandise both in terms of physical bulk and space, and in cost to have sitting around. Unless he's doing tens of millions of sales a year, that is way too much inventory to have at rest.
Insurance could tell you nothing was ever covered and never spend a dime - but insurance is a heavily audited industry and at the very least they would do an investigation. Keep in mind, it's not like Amazon got in a few cargo containers of high end clothing and fed them into a shredder - they kept in a warehouse and sold it and got enough complaints about them not being genuine articles that they de-shelved them from inventory, gave him 30 days to retrieve them and only then after his refusal had them destroyed.
For what it's worth, removing THAT much merchandising from shelving is a serious labor and time sink. You don't do that because you got one or two complaints about crushed boxes or off sizes.
Which think of this in reverse - if Amazon told you that you needed to retrieve your $1.5M of merchandise in 30 days or it would be destroyed, would you just roll the dice on that? Even if you can't afford freight, you'd still go haul as much as you can in whatever you drive and hock it on the corner.
The only reason you would let Amazon bulk destroy merchandise (with significant notice and several reminders from them, after signing a contract that pre-dictates out the terms of rejected merchandise), the only reason you would let merchandise sit like that, is if it has no significant value. When the cost of freight exceeds the cost of goods - then yeah, don't freight it and absorb the loss because it's less damage.
