From a former auto insurance adjuster, so understand my qualifications and biases...
There are two insurance coverages at hand. First, collision/comp is simply insurance for the car. It is a pure gamble, as all insurance is. For x dollars per month, you are betting that your car will be destroyed/harmed/damaged beyond your comfort level of paying for it. Determine the value of your car via Kelly's Blue Book or the National Auto Dealers Association website. Then subtract your deductible. This is the amount you are insuring. If you were to be in an accident, incident, hail storm, whatever, your collision or comprehensive would cover this amount. I'm guessing the car is worth ~$4000-4500 dollars and assume a $500 deductible. Is your monthly payment worth insuring $4000? If you got into an accident and your car was toast, how would you be with a $4000 vs. without the check. That the question to ask.
Now on to the liability portion of your policy, that is the bodily injury, property damage, etc. coverages. If you are driving along and you hit a car full of people and it is your fault, this is the amount your policy will pay for the various coverages. The property damage limit is the maximum amount that your policy will pay for property damage. In Ohio the minimum amount of property damage coverage you are required to have is $7500 dollars. If you hit a car that is worth $10,000, the extra $2500 is coming out of your pocket, as you are still liable for it. If you hit a car worth $30000, you are on the hook for $22500. From a bodily injury standpoint, this is normally expressed in two figures. Ohio's limits are $12500 per person and $25000 per accident. So if you hit a car full of people and are at fault, the maximum your policy will pay is $12500 per injured person, up to a maximum of $25000 per accident. Again, any injury costs over those amounts become your personal responsibility.
In addition to these liability limits, you can obtain additional insurance policies called an umbrella policy that will cover beyond whatever liability limit you have selected or is required by the insurance company. These policies can cover up to $1 million and more.
It is my opinion that to carry state minimum coverage would be absolutely ridiculous. Should you get into an accident and cause serious damage or injury to another party, you will be in a world of financial hurt. Much more hurt than than $40, $50, or $150 per month that you will save. Remember, these are accidents and unforeseen events. No one goes out of their driveway and intends to cause an accident with injuries and damage. It is the nightmare of some people that have been through such an event. Think about the 1-800-SUE-EM advertisements you see all over for "Personal Injury Attorneys" and weigh the risk you are assuming by carrying state minimum coverage. Should you hit someone and hurt or heaven forbid kill them, one of those attorneys will be coming after you. Your $12500 limit will be eaten up within the first week.
I've been personally involved in accidents and liability claims with death, permanent disfigurement, and $100,000+ property damage. Cars are lethal objects capable of causing a whole lot of damage. Protect yourself appropriately. If you want to drop the collision and comprehensive coverage and assume a bit of personal risk with your own property, that would seem reasonable. From what I gather in the original post, it is an unsecured loan, meaning the car is not collateral for the loan. If this is the case, you are only protecting ~$4000 worth of net worth after all. If the car is collateral on the loan, the lender will most likely require you to keep this coverage, much like a mortgage lender requires you to keep homeowners insurance on your house. With the liability coverage you are protecting your entire personal net worth as it stands now, plus the potential of future earnings garnishment, etc.
This should go to everyone to look at and understand their auto insurance policy. "State minimum coverage" is hardly worth the paper that it is printed on in most cases. It will not protect you should your liability be an amount over your policy limit. YOU will be paying that difference.