My family and I were in a car wreck 12 1/2 years ago. My grandmother was driving and fell asleep and crashed into a tree. When she hit the tree, her head bounced backwards and one of my younger brothers, Ben, in the head. My other younger brother, Tyler, was sitting behind her in his carseat. The impact forced her chair to recline and collide with his head. Both of my brothers had to have brain surgery and Ben had to be life-flighted to the hospital. Ben was given less than 70% chance to live and was in ICU for about a month and a half. He is perfectly normal now, but I know how close he came to death.
My mom was understandably affected, and it showed when she had to drive anywhere. She found all the back roads to anywhere so she wouldn't have to travel in heavy traffic because she would get soooo nervous. Her fear of these major roads transferred to me when I began to drive, and I was deathly afraid to travel on the major roads even when they were mostly empty. She didn't have to ban me from high traffic intersections because I avoided them on my own.
Maybe that was a good thing because maybe I wasn't ready to drive on those roads, but I wasn't brave enough to try them until I was engaged, and my future husband insisted I drive on them. Personally, I wish I had not been so afraid. Now that I drive them all the time I realize there was nothing to be afraid of.
I think it would be better if you taught him to not be afraid of driving even though it will be hard after being in an accident and being so close to losing a familiy member. If you tell him he can't drive certain areas, he is just going to drive them when you are not around. Wouldn't you rather help him learn how to drive them so that when he does, he knows how to handle things? Just help him learn to be a good driver so that when he is by himself he knows how best to avoid an accident.