you will have problems with simulating cloth if you dont create space for your cloth. Upperarm colliding with chest, as you mentioned is one of areas where that issues is regular thing.
I usually prepare my collision mesh (fat / skin) in Houdini. I run alembic tissue simulation mesh through deformer that check for collisions / self penetrations in mesh itself. for example, arms down pose, where bicep and upper arm is tight to the chest you will not be able to simulate cloth, becuase there is no space for it.
Where i detect surfaces collision (upperarm with chest) i push vertices in normal direction back, to separate surfaces a bit. Then you are left with space for your cloth if even arm is completely merged with chest.
i hope that make sense?