When you reserved your rental car online, you thought that was the "final" price. Think again! Mexico charges a third party insurance that is between $12-$15 USD per day. Yes, I said per day! Sometimes that is more expensive per day than the actual tiny car you reserved. This adds up quickly. Some companies may require you to pay this extra charge in cash. There is no getting around this surcharge. It is a mandatory fee and I believe that the rental car agents decide the amount because I have been charged different rates. I believe that the only car company that "includes" this fee in their reservations when booking online is AVIS.
You will need a valid driver's license and your passport to rent a car.
Check with your credit card company to see if they cover any Liability Insurance with renting cars in Mexico. Mine does and I do not pay extra for liability insurance when renting a car in Mexico. I make sure to take the paperwork that shows all the information with me just in case I need to call my credit card company in an accident. Liability Insurance is different from the mandatory third party Mexican Insurance.
I suggest also taking pictures of the vehicle BEFORE you leave the lot. They will give you a paper to mark where there are dents and scratches. It's Mexico, almost all the rental cars have numerous scratches and dings on them. You want to make sure that when you return the car, they do not try to make you pay for a ding that was apparently there before you left the lot. Always make sure there is a spare tire in the trunk and the jack!
Just remember when reserving that economy car online because it is the cheapest, that you keep in mind that it needs to hold your suitcases also. A lot of the small cars that they rent barely have enough room for a large suitcase in the trunk!
Driving in Mexico is pretty much the same as driving in the United States. Stay alert and be aware of livestock crossing the road! Also, at stop signs (called "Alto" in Mexico) beware that all drivers do not stop for them. I would always use caution at stop signs to make sure the other driver stops before going. I suggest that you also "hide" your cash. If you are pulled over by the police, they will demand money in exchange for letting you go free without a ticket. They will ask you to open your wallet so they can see how much money you have. I usually will leave about $20 USD in my wallet. All rental car license plates usually end with the letters "AVB" or "AVC" in Cabo San Lucas, therefore showing that it is a rental car.