I'm also sorry for your loss. My dad died in 1993 and it was devasting to me. Time does heal wounds.
It seems outrageous for the driver to be suing for recovery of damages to a vehicle. My gut response is to discourage the driver. But this may not lead to healing. So, why not combine the healing process with something additionally constructive. Hence my suggestion below. I've never done this myself, so can't speak to the difficulty and the commitment that's involved. But here goes:
1) Establish a charitable foundation in your father's name - devoted to something that he held dear.
2) Affiliate the charity with like-minded or parent charities. Begin holding modest fundraising events.
3) Lawyer up. Seriously.
4) On advice of counse and after appropriate considerationl, file a wrongful death civil suit for, say, $5-10M - the proceeds from which will go in total to the foundation.
I'm sorry... I'm not a cyclist. And I've never used this type of forum either. I didn't realize I needed to prove that my story is legitimate. I intentionally left out details out of fear that this could somehow be used against my family in future proceedings. My dad was an avid cyclist, and I simply thought I could get helpful information from his peers who may have had experience with this kind of thing before. If that is laughable, then forgive me for my idiocy. Perhaps the death of my father has left me with temporary irrational thought. Thanks for your sensitivity. No need to worry about me visiting the site again.
You need to go to a lawyer's office. Going today would be good. Wrongful death recovery varies from state to state. There are issues like lost future earnings, pain and suffering prior to death, loss of consortium, and recovery for these losses vary widely depending on where you and/or the driver live. No one except a personal injury/wrongful death practitioner, licensed to practice law in your state, can answer these questions for you. Call your local bar association for a referral to lawyers who do that kind of litigation. Hire a litigator, not a "rainmaker". Rainmakers are those guys who advertize on TV all over the country but refer their cases out to local litigators for a percentage of the recovery. Read any retainer agreement carefully. Most states now require lawyers to hand out plain English statements advising you of the details of the agreement, and your rights and responsibilities as a client.
You've just received advice from a real life lawyer, who doesn't practice that kind of law and has no axe to grind.