There's very little point in having travel insurance if it is not invoked for the very purpose that it is intended to help, namely covering losses when the unexpected happens. Or known unknowns as someone once put it. So like the other suggestions here I would first check with AA - particularly if your father in law was one of the travellers, or particularly if actually you could make use of the flight / similar flight in several months time [this may not be on your radar but it's good to think it through]. Otherwise it makes sense to talk to the insurers.

My condolences for the loss, it must be a difficult time for you.