Make sure your driver's license is current. It should also be valid for the entire period you plan to spend in Mexico.
Reserve your car in advance online. This will avoid further complications and last-minute fees being added on by unscrupulous rental agencies.
Pay with your credit card. When you pay with most American credit cards, you are automatically covered by insurance when renting a car in Mexico. When in doubt, check with your credit card company.
Buy Mexican car insurance. It is not required, but can save you money when it comes time to rent the car. Mexican car insurance can be purchased online or in offices near the United States-Mexican border. It should cost less than $10 per day (as of 2010.)