Life insurance would not cover the accident itself, but if an insured was killed in the car accident then the claim would be covered. The only scenario I could think of where a claim would be denied in a car wreck would be a form of suicide that was proven and the life policy was still under two years for contestability. Otherwise it is covered as an accidental cause of death.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Most young people are convinced that if they die prematurely it will be in a car accident. The cause of death is not the critical issue. If the person is killed in a crash the company will pay a death claim unless the “accident” was in fact proven to be suicide. If the policy has an accidental death benefit provision additional money will be paid.
Life insurance covers death that is due to accidental causes, such as car accidents or falls. Life insurance also covers death that is due to natural causes, such as illness or "old age". As long as it is not suicide in the first two years, you don't have to worry about the cause of death when you have life insurance.
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If the insured is living and they are in a car accident, they would need to look at coverage under their auto insurance policy.