Many countries do not recognize a U.S. driver's license. However, most countries accept an international driver's permit. Before departure, you can obtain one at a local office of an automobile association. The U.S. Department of State has authorized two organizations to issue international driving permits to those who hold valid U.S. driver's licenses: AAA and the American Automobile Touring Alliance. To apply for an international driving permit, you must be at least age 18, and you will need to present two passport-size photographs and your valid U.S. license. Certain countries require road permits, instead of tolls, to use on their divided highways, and they will fine those found driving without a permit.
Car rental agencies overseas usually provide auto insurance, but in some countries, the required coverage is minimal. When renting a car overseas, consider purchasing insurance coverage that is at least equivalent to that which you carry at home.
In general, your U.S. auto insurance does not cover you abroad. However, your policy may apply when you drive to countries neighboring the United States. Check with your insurer to see if your policy covers you in Canada, Mexico, or countries south of Mexico. Even if your policy is valid in one of these countries, it may not meet its minimum requirements. For instance, in most of Canada, you must carry at least $200,000 in liability insurance, and Mexico requires that, if vehicles do not carry theft, third party liability, and comprehensive insurance, the owner must post a bond that could be as high as 50% of the value of the vehicle. If you are under-insured for a country, auto insurance can usually be purchased on either side of the border.
You also need to check and see what the rules of the road are for the country you are visiting. You may find that you will be driving on the opposite side of the road from what you are used to. Remember, you will be in a foreign country and subject to their rules - so study before you go. Be safe and watch out for the other guy.