Why cancel AppleCare?
Depends how badly damaged it is, but I was told in the apple store today that if I pay for the repair, my applecare will cover the repair as if it were the original laptop. So the AppleCare is probably useless *right now* because they'd attribute stuff to the drop
but once screen replaced it will cease being useless.
I wouldn't assume this, though, I'd ask yourself in the Apple Store, and keep a note of what you are told and by whom!