I would strongly recommend Dana's thread to everyone! Being in the aviation insurance business, its good to see when things work out the way them should.
For each individual is the decision of how much insurance coverage can one afford is dictated by a combination of how much can one afford to loose in an accident or incident and how much is available. Physical Damage coverage or Hull is a completely controllable option for almost everyone that owns the aircraft free and clear of any liens. If you can afford or want to go without it you should. If you are concerned only for items outside your control like common Mother Nature perils, hangar fires, or vandalism then Ground Not in Motion is the best option for you. This gives you full protection on the Hull up to the stated limit on the policy while the aircraft is not moving under its own power and liability protection whether the aircraft is moving or not. Meaning you have liability coverage while flying or the engine is running, but no longer physical damage coverage. If you want the ability to repair your aircraft or get a similar new one with very little out of pocket expenses, except for things that our damaged due to wear and tear or mechanical failure, then full coverage insurance is a fair investment for the risk involved. Jeff's also brings up a good point that repairs are more than just your time - its parts also.
One of Dana's strongest points regarding value is not under insuring your aircraft to save money. It may end up costing you money in the long run. An aircraft insured under market value can lead the insurance company to a greater possibility of a total loss meaning they write you a check for the policy limit, take the aircraft, and sell the salvage. You loose because the policy limit was not a big enough check and you don't have your salvage to try and re-build. Some of these things can be negotiated for a reduced settlement so you can keep your aircraft, but this is a typical process. It can turn into a claims nightmare.
As for liability coverage, with as inexpensive as this is for most - typically $600 or less for a policy which covers up to $1,000,000 each occurrence for bodily injury and property damage limited to $100,000 for each passenger is money well spent to offer a first line of protection for you and your family. It allows for defense coverage if you are sued and can pay for things you didn't intend to happen but do. For instance, you have an engine failure and you can't make the airport. You land in an orange grove, your fuel leaks out and kills a section of the grove. Farmer sues you for $10,000 in lost income and replacement costs of the damaged items. The local natural resources department sends you a bill for $10,000 for remediation of the contaminated soil they had to remove and replace. Can you afford to defend yourself in the suite, pay the resource department and pay the judgment along with repairing your aircraft? If you can ? then you are free to go without. Just remember who is left to take care of these items if the end result of the accident does not leave you here to take care of it.
Glenn - Your insurance is "with" neither EAA or Falcon Ins. Falcon Insurance is a broker. They take your info and solicit your risk to several insurance companies and then report to you the quotes. EAA simply does the advertising for the deal. 
