Help needed on car rental insurance, "Excess Reduction", "Bond"

Hello all. First visit to NZ, 30 days. I would like some help with understanding the pros and cons of how to handle the insurance for a camper van rental. They have insurance and a bond required(which I understand), plus we can optionally get whats called "excess reduction". It appears that this "reduction" applies to liability or deductibles in the event of a catastrophic event (?). But this fee is not refundable, and basically triples the insurance. So why should I do this? Are windshields and tires (tyres) commonly damaged, or is theft/vandalism common and I am best to get more insurance? No offense to my Kiwi brethren, just trying to be frugal as much as I can but not making a poor financial decision.

I would like some help to decide what is the best option, looking at the relative merits of this excess reduction, bonds, etc. I am pretty good about avoiding accidents in other countries, but no guarantee.

Thanks in advance.

Theft can be common in areas with high tourist numbers. People often dont take enough precautions. Years ago, I was shunted into the back of a campervan. I was stationery and stopped not too close. Had my car written off and it caused over $7000 for the campervan to get the rear door fixed. So repairs for campervans isnt cheap.
If you substituted Australia (or any country for that matter) for NZ, you could ask pretty much the same questions.

In insurance terms, 'excess' is the maximum amount you pay in case of an accident - lets says it's $4000. If you have an accident that costs $17,000 to repair, you pay the the first $4000. If you have a small accident that costs $2000 to repair, you pay $2000.

If you pay an extra premium to reduce the excess to $1000, you would pay $1000 in both examples above. You have to judge what level of excess you can afford to pay in the event of damage.

As nvg says - what level of risk can you afford? Let's say you choose the "normal excess" of say $2500 (depends on the company & your age). Your car suffers a few stone chips on a gravel road - cost to repair $500, so you pay $500 - no problem. But say you are unfortunate enough to hit a wandering sheep or possum & the damage costs $5000 to repair - you have to pay $2500.
Some visiitors find that their credit card or regular travel insurance will cover the excess so they save money. Personally I cannot afford the risk so I always take the full insurance.