Your U.S. policy likely only covers you in the U.S. and Canada, so you'll need a separate policy when driving in all other countries.
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Rental cars are slapped with Germany's 16% Value Added Tax (VAT), registration fee, and airport fees (but rates do include the required third-party liability insurance). These additional fees may equal up to 25% of the daily rental.
But, do you need to rent a car during your trip to Spain at all? It actually depends on your agenda and where exactly you're planning to travel. If your main goal is only to spend time in cities like Barcelona, Madrid, Valencia, Seville or Málaga, you don't need a car. In fact, having one will make your life harder.
USA, Canada, Australia, and other countriesUnder Spanish law, visitors on a 90-day limit stay or having a Schengen Tourist Visa may drive a vehicle in Spain if they hold a valid home country driving license and a valid International Driving Permit. In other words, you need BOTH licenses.