The Death Watch Beetle (Xestobium rufovillosum) is a beetle whose larvae consume wood. They are approximately 4cm long and are said to emit a loud ticking or clicking sound which can be heard from the rafters in which it dwells: this gives it the name 'watch'. The name 'death' may come from the destructive capabilities of the larvae.
Features in a nativity song in which the Innkeeper complains repeatedly that 'there's deathwatch beetle in the roof.'
It has been considered an omen of impending death at least as far back as 1787, when antiquarian Francis Grose included it on his three page inventory of contemporary omens of death. (Walker, 1995. "Out of the Ordinary" Folklore & the Supernatural." pg 123. Logan:Utah State University Press)
The death-watch beetle are often found decomposing corpses. They have a habit of striking their body against the wooden coffin in a flicking motion. When the practice of spending the night sitting up with the corpse was prevelent, it was a called a death watch. Participants were startled by the knocking noise caused by these insects coming from within the coffin. Often times this led uneducated peasants to believe that the dead were rising back to life. This is how the beetle received its' name, the 'death-watch beetle.'