There is no one-size-fits-all answer - it depends on you and your situation. Just like all other insurance plans, it depends on how well you can financially handle losses and what you are willing to pay for the protection.
I have my house well-insured with a low deductible. Same for vehicle collision/liability. Probably more than I actually need, but I sleep better at night knowing a wreck or tornado won't ruin me financially. But I agree with Chuck33079 and try to keep enough in savings for major vehicle repairs instead of purchasing a policy.
As a rule-of-thumb, any add-ons the dealer is selling you, you can get cheaper elsewhere. Eg, you can usually get better financing at a bank. (And if the bank wants loan insurance (decreasing term life), you can usually get that cheaper from your personal insurance agent.)
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