Your nephew's immediate family will need to contact the at-fault party's insurance company to find out exactly what type of auto insurance coverage the driver had and the limits to that coverage as well as what death benefits, if any, his family will receive.
The minimum insurance required in Texas is bodily injury liability of $20,000 per person for a total of $40,000 per accident and $15,000 property damage liability. So for your nephew's death as a pedestrian it would likely fall under the $20,000 BI limit for injuries and death.
If your nephew had his own auto insurance policy and had medical coverage as one of his coverages, than it should cover medical and funeral bills arising from accidents, including those where if he or his family members are struck by a car as a pedestrian or a bicyclist.
Beyond contacting the at-fault person's insurance company to find out what coverage there may be for the nephew being hit and killed by their policyholder, you may want to contact the Texas Department of Insurance to make certain you understand the coverages the other person and your nephew had and what his family may receive as compensation.
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[Let CarInsurance.com help you find affordable auto insurance now.] *Effective April 1, 2008, the minimum coverage amount required by the TX state's financial responsibility law increased to $25,000 for each injured person, up to a total of $50,000 per accident, and $25,000 for property damage. This new basic coverage is referred to as 25/50/25.The limits prior to April 1, 2008 were $20,000 for each injured person, up to a total of $40,000 per accident, and $15,000 for property damage per accident as we mentioned above. | 
