Whoever sells you your inter-rail ticket should be able to offer you an insurance package at the same time, although this might be more expensive than shopping around it may be worth it as you will be getting something that is tailored to what you need. At the back of the ticket is a small book to fill in the details of the trains you have taken. Some guards on trains will ignore it, but others will get annoyed if you haven't filled in every trip you've taken. They are meant to check and stamp each entry. Remember to check to see if you need to pay a supplement on the train you wish to travel on, if you do and you get on the train, you will be charged a higher rate, some of which can go straight into the guards pocket.
Security Be careful.
There are many people in Europe who consider backpackers to be easy targets and a lot of them are. The pickpockets are good are you really won't notice them, see my account of almost being pick pocketed in Barcelona. As much as possible never let your valuables leave your sight, even when taking a shower. This is where it is handy to have someone traveling with you who can look after everything while you are having a shower. Otherwise you can just put everything into a locker at your hostel.