Optional PIP Arbitration Under 21 Del. C. § 2118(j) Is Non‑Preclusive of Subsequent UM Litigation: Commentary on Vaughn v. Allstate

I. Introduction

This commentary examines the Supreme Court of Delaware’s decision in Damisha Vaughn v. Allstate Property and Casualty Insurance Company, No. 109, 2025 (Dec. 12, 2025). The Court reversed the Superior Court’s grant of summary judgment in favor of Allstate, holding that an Insurance Commissioner Arbitration (ICA) decision denying Personal Injury Protection (PIP) benefits does not preclude a subsequent claim for Uninsured Motorist (UM) coverage under the same policy.

At the center of the case are two interlocking questions:

1. Whether a non‑binding, optional PIP arbitration conducted under 21 Del. C. § 2118(j) can have collateral estoppel (issue preclusion) or res judicata (claim preclusion) effect on a later UM lawsuit.
2. Whether the specific language of Allstate’s policy allows any preclusive effect from a PIP arbitration to flow into a distinct UM coverage dispute.

The Supreme Court answered both questions in the negative. It held that:

• Section 2118(j) arbitration is optional and non‑binding and therefore cannot constitute a “final adjudication on the merits” for preclusion purposes.
• The policy’s structure expressly separates PIP arbitration from UM arbitration, with different requirements and effects, so that a PIP award cannot serve as a binding determination of facts in a UM claim.

The decision establishes an important precedent for Delaware insurance law and civil procedure: an optional, non‑binding ICA decision on PIP benefits neither collaterally estops nor bars by res judicata a later UM coverage action arising from the same incident.

II. Summary of the Opinion

The Court reviewed de novo the Superior Court’s grant of summary judgment to Allstate. The Superior Court had held that collateral estoppel barred Ms. Vaughn’s UM claim because an ICA panel, in denying her PIP claim, found she was not credible and had not proved that an accident occurred.

The Supreme Court reversed, holding:

1. Collateral estoppel does not apply because:
   • The ICA PIP arbitration was expressly optional and non‑binding under 21 Del. C. § 2118(j) and under the policy’s own PIP arbitration clause.
   • The ICA did not and could not constitute a “final adjudication on the merits” of Ms. Vaughn’s UM coverage claim.
   • Material factual disputes existed about whether Ms. Vaughn had a full and fair opportunity to litigate in the ICA proceeding, precluding summary judgment.
2. Res judicata (claim preclusion) does not apply because:
   • The PIP arbitration involved a PIP benefits claim; the subsequent lawsuit involved UM coverage — legally distinct causes of action, even if they share a factual issue (whether an accident occurred).
   • Under § 2118(j) and the policy language, UM claims could not have been litigated in the ICA PIP proceeding at all, which defeats claim preclusion.

Accordingly, the Supreme Court held that neither doctrine barred Ms. Vaughn’s UM action, and it reversed the Superior Court’s judgment.

III. Factual and Procedural Background

A. The Accident and PIP Claim

• In early August 2020, Ms. Vaughn was driving a rental car when she alleges another vehicle struck her and fled the scene (a hit‑and‑run scenario).
• She sought PIP benefits as a covered individual under her mother’s Allstate policy.
• Allstate denied the PIP claim, and Ms. Vaughn pursued an ICA arbitration under Delaware’s PIP arbitration statute, 21 Del. C. § 2118(j).

B. ICA Arbitration and Denial of PIP Benefits

• In October 2021, an ICA panel held a hearing and issued a decision for Allstate.
• The panel made a very brief, central finding: it did not find Ms. Vaughn credible and concluded she had not met her burden to prove that an accident occurred.
• Ms. Vaughn did not appeal the ICA’s decision.

C. The UM Coverage Lawsuit

• In June 2022, Ms. Vaughn filed a Superior Court complaint against Allstate, this time seeking UM coverage rather than PIP benefits.
• Allstate moved for summary judgment, arguing:
  • The ICA’s factual finding that no accident occurred should be given preclusive effect.
  • Accordingly, both res judicata and collateral estoppel barred Ms. Vaughn from relitigating whether an accident occurred.
• The Superior Court initially denied that motion, finding a material factual dispute as to whether Ms. Vaughn had a full and fair opportunity to litigate in the ICA.

D. Renewed Summary Judgment and Superior Court Ruling

• Allstate then re‑deposed Ms. Vaughn. In her second deposition:
  • She either did not know or could not recall many details about the accident or the ICA arbitration.
  • She testified that the ICA hearing occurred by telephone, that Allstate’s expert did not testify live (only his report was introduced), and her attorney was not physically with her.
  • She believed, mistakenly, that the arbitration had in fact been appealed.
• Allstate renewed its summary judgment motion, now asserting that the record showed Ms. Vaughn had a full and fair opportunity to litigate and simply failed to appeal.
• The Superior Court agreed, emphasizing:
  • She had counsel in the ICA proceeding.
  • She had no articulated reason for not appealing other than disliking cross‑examination.
• The court held that the issue whether a motor vehicle accident occurred was “fully and finally litigated” before the ICA and granted summary judgment to Allstate on collateral estoppel grounds.

E. Appeal to the Supreme Court of Delaware

Ms. Vaughn appealed, arguing that an ICA panel’s denial of PIP benefits cannot bar a later UM coverage claim and that she did not receive a full and fair opportunity to litigate in a non‑binding, phone‑based, procedurally limited arbitration.

IV. Legal Framework

A. PIP and UM Coverage in Delaware

• PIP (Personal Injury Protection) is no‑fault coverage mandated under Delaware law, providing medical and related benefits regardless of fault.
• UM (Uninsured Motorist) coverage protects insureds when they are injured by a driver who has no insurance or, effectively, cannot be identified (e.g., hit‑and‑run).
• Although the same underlying event (a car accident) may trigger both types of coverage, PIP and UM claims are legally distinct:
  • PIP is a statutory, no‑fault benefits scheme.
  • UM is a fault‑based, contract‑driven coverage requiring proof that an uninsured (or unknown) negligent driver caused injury.

B. 21 Del. C. § 2118(j) – PIP Arbitration

Section 2118(j) establishes an arbitration mechanism for PIP disputes administered by or through the Insurance Commissioner. Key features emphasized by the Court:

• The statute describes the arbitration as “purely optional”.
• It states that “neither party shall be held to have waived any of its rights by any act relating to arbitration”.
• Delaware case law (e.g., Gorum v. GEICO Indemnity Co., Scott v. Bey) interprets this regime as non‑binding and non‑preclusive.

Thus, the statutory design itself presumes that PIP arbitration does not foreclose further litigation.

C. Collateral Estoppel and Res Judicata – Core Tests

1. Collateral Estoppel (Issue Preclusion)

The Court uses the four‑part test from Betts v. Townsends, Inc. and earlier authorities:

1. The issue previously decided is identical with the one presented in the later action.
2. The prior action has been finally adjudicated on the merits.
3. The party against whom the doctrine is invoked was a party (or in privity with a party) to the prior adjudication.
4. The party against whom the doctrine is raised had a full and fair opportunity to litigate the issue in the prior action.

In Vaughn, elements (1) and (3) were not disputed:

• Both the ICA PIP claim and the UM lawsuit required Ms. Vaughn to prove that an accident occurred and that she was injured.
• Ms. Vaughn and Allstate were the parties in both proceedings.

The dispute centered on:

• Element (2): was the ICA arbitration a “final adjudication on the merits” relevant to UM coverage?
• Element (4): did Ms. Vaughn have a full and fair opportunity to litigate in that arbitration?

2. Res Judicata (Claim Preclusion)

Citing Scott v. Bey, the Court restates the Delaware test:

1. The original forum had jurisdiction over the subject matter and the parties.
2. The parties in the original action are the same as in the subsequent action or are in privity.
3. The original cause of action, or issues decided, are the same as in the later case.
4. The issues in the prior action were decided adversely to the plaintiff in the later case.
5. There was a final decree or judgment in the prior action.

In Vaughn, the pivotal questions are:

• Is a PIP arbitration the “same cause of action” as a UM coverage lawsuit?
• Can UM claims even be brought within the ICA’s PIP arbitration jurisdiction?
• Was the ICA decision a “final decree” for claim‑preclusion purposes?

V. Precedents and Authorities Cited

A. Standard of Review and Summary Judgment

• Messick v. Star Enterprises, 655 A.2d 1209 (Del. 1995), and Arnold v. Society for Savings Bancorp, Inc., 650 A.2d 1270 (Del. 1994):
  • These cases establish that the Supreme Court reviews a grant of summary judgment de novo and will affirm unless the trial court misapplied the law.
• Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742 (Del. 1997):
  • Reinforces the standard that summary judgment is only appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.

B. Definitions and Elements of Preclusion

• Betts v. Townsends, Inc., 765 A.2d 531 (Del. 2000), and M.G. Bancorporation, Inc. v. Le Beau, 737 A.2d 513 (Del. 1999):
  • Clarify the distinction between res judicata and collateral estoppel:
    • Res judicata bars relitigation of claims or legal conclusions.
    • Collateral estoppel bars relitigation of factual issues actually decided.
  • Betts also illustrates that different workers’ compensation claims (temporary total vs. permanent partial disability) are separate causes of action, even when both require proof of causation. This analogy supports treating PIP and UM claims as distinct.
• State v. Machin, 642 A.2d 1235 (Del. Super. 1993):
  • Provides the four‑factor test for collateral estoppel adopted in Betts.
• Scott v. Bey, 1986 WL 5865 (Del. Super. Apr. 28, 1986):
  • Supplies the five‑factor test for res judicata cited by the Court.
  • Also emphasizes that non‑binding arbitration does not create res judicata or collateral estoppel.

C. Burden of Proof and Finality in Collateral Estoppel

• Proctor v. State, 931 A.2d 437, 2007 WL 2229013 (Del. Aug. 2, 2007) (TABLE), relying on Dowling v. United States, 493 U.S. 342 (1990):
  • The party asserting collateral estoppel bears the burden of proving that the issue was actually decided in the first proceeding.
• Astrum Fund I GP, LP v. Maracci, 2022 WL 252343 (Del. Ch. Jan. 27, 2022), citing:
  • PG Publishing, Inc. v. Newspaper Guild of Pittsburgh, 19 F.4th 308 (3d Cir. 2021).
  • Kerr-McGee Refining Corp. v. M/T Triumph, 924 F.2d 467 (2d Cir. 1991).
• Although those cases arise in the context of confirming or vacating arbitration awards, they provide a framework for assessing finality of arbitral decisions by examining:
  • The terms of the contract.
  • The attributes of the award and the arbitration record.
• The Supreme Court uses these concepts by analogy: here, the contract (policy) and statutory scheme make clear that ICA decisions on PIP benefits are not final adjudications for broader coverage questions like UM.

D. Optional and Non‑Binding Nature of PIP Arbitration

• Gorum v. GEICO Indemnity Co., 2011 WL 7063293 (Del. Super. Dec. 8, 2011):
  • Construed 21 Del. C. § 2118(j) and held that PIP arbitration is “purely optional,” and “neither party shall be held to have waived any of its rights by any act relating to arbitration.”
  • Concluded that such arbitration “will not give rise to the application of res judicata or collateral estoppel.”
• Scott v. Bey (again):
  • Earlier authority for the same principle: non‑binding arbitration does not support preclusion.
• Abdul-Ahad v. Nationwide Mutual Fire Insurance Co., 2016 WL 4269512 (Del. Com. Pl. Aug. 10, 2016), and Hitchens v. Unemployment Insurance Appeal Board, 1987 WL 14872 (Del. Super. July 23, 1987):
  • Confirm that purely optional or preliminary proceedings do not generally carry preclusive effect in later judicial actions.

E. Contract Interpretation and Insurance Policy Language

• Emmons v. Hartford Underwriters Ins. Co., 697 A.2d 742 (Del. 1997), quoting Hallowell v. State Farm Mutual Automobile Insurance Co., 443 A.2d 925 (Del. 1982):
  • When the language of an insurance contract is clear and unequivocal, courts must enforce its plain meaning.
• In re Verizon Insurance Coverage Appeals, 222 A.3d 566 (Del. 2019), quoting Elliott Associates v. Avatex Corp., 715 A.2d 843 (Del. 1998):
  • The “fundamental rule” of contract interpretation is to give effect to all terms of the instrument, avoiding constructions that render any provision superfluous.
• O’Brien v. Progressive Northern Insurance Co., 785 A.2d 281 (Del. 2001):
  • Contracts should be interpreted to avoid making any provision “illusory or meaningless.”
• Torrent Pharma, Inc. v. Priority Healthcare Distribution, Inc., 2022 WL 3272421 (Del. Super. Aug. 11, 2022):
  • Where one contract section omits a term present in another, the omission is presumed intentional.

The Court uses these interpretive principles to analyze Allstate’s policy, which:

• Contains a general arbitration provision for PIP claims, with no reference to binding effect or judgment entry.
• Contains a more detailed UM arbitration clause, expressly:
  • Requiring mutual consent to arbitrate UM disputes.
  • Requiring that arbitration be conducted under American Arbitration Association (AAA) rules or as agreed.
  • Providing that the decision of two arbitrators “will be binding” and may be entered as a judgment.

The structural and textual differences between the PIP arbitration clause and the UM arbitration clause are central to the Court’s reasoning.

VI. The Court’s Legal Reasoning

A. Collateral Estoppel: No Final Adjudication and No Proven Full and Fair Opportunity

1. No “Final Adjudication” for UM Purposes

The Court first holds that the ICA’s PIP decision is not a “final adjudication on the merits” for purposes of Ms. Vaughn’s UM claim. It gives two principal reasons.

(a) Statutory and Case‑Law Characterization of PIP Arbitration

• Under 21 Del. C. § 2118(j), PIP arbitration is explicitly labeled “purely optional”.
• The statute states that neither party “shall be held to have waived any of its rights by any act relating to arbitration.”
• Gorum and Scott interpret this language to mean that PIP arbitration is non‑binding and that participating in it:
  • Does not waive the right to litigate.
  • “Will not give rise to the application of res judicata or collateral estoppel.”

In light of this clear statutory and decisional framework, Allstate could not show that the ICA decision was final for purposes of UM coverage.

(b) Policy Language Separating PIP and UM Arbitration

Second, the Court looks to the policy itself:

• The PIP arbitration clause:
  • Allows claims or disputes “related to the policy” to be resolved by arbitration only upon mutual consent.
  • Includes several procedural limitations (e.g., no punitive damages or attorneys’ fees, no class arbitration).
  • Does not state that the arbitrator’s decision is binding or may be entered as a judgment.
  • Expressly excludes disputes governed by the separate UM arbitration clause.
• The UM arbitration clause:
  • Applies where the insured and the insurer “do not agree on [the insured’s] right to receive damages or on the amount.”
  • Requires mutual consent to arbitrate; otherwise, the dispute is resolved in court.
  • Requires arbitration under AAA rules or as agreed by the parties.
  • Provides explicitly that “the decision of any two arbitrators in writing will be binding and may be entered as a judgment.”

Using Delaware contract‑interpretation principles (Emmons, Hallowell, Verizon, O’Brien, Torrent), the Court reasons:

• The omission of any binding/judgment‑entry language from the PIP clause, contrasted with its express inclusion in the UM clause, is presumed intentional.
• The explicit statement that the PIP arbitration provision “shall not apply” to UM disputes confirms that a PIP arbitration cannot double as a UM arbitration.
• Therefore, the ICA PIP decision was never contractually intended to be:
  • A binding determination of issues relevant to UM coverage, or
  • A final adjudication capable of being enforced as a judgment on UM questions.

Even if the policy did not expressly exclude UM claims from PIP arbitration, the ICA proceeding did not satisfy the conditions for a UM arbitration:

• No evidence of any mutual agreement to arbitrate UM coverage issues.
• No indication that the arbitration followed AAA rules or an agreed set of rules for UM disputes.

Thus, as a matter of both statute and contract, the ICA decision cannot be treated as a final adjudication governing UM coverage.

2. No Established “Full and Fair Opportunity” to Litigate

Even if the ICA decision could be considered “final,” Allstate was still required to show that Ms. Vaughn had a full and fair opportunity to litigate the issue there. The Supreme Court finds that Allstate did not meet this burden on a summary judgment record.

Key factors:

• Procedural limitations of the ICA hearing:
  • The hearing was conducted by phone.
  • Allstate introduced an expert report without calling the expert to testify.
  • Ms. Vaughn had no opportunity to cross‑examine that expert.
  • Her testimony was brief, and her lawyer was not physically present with her.
• Nature of the ICA decision:
  • The ICA rendered a one‑sentence conclusion that Ms. Vaughn was not credible and had not met her burden to prove an accident occurred.
  • The lack of more detailed reasoning or procedural “guardrails” made it inappropriate to give this finding heavy preclusive weight.
• Ambiguity around failure to appeal:
  • Allstate argued, and the Superior Court accepted, that failure to appeal showed Ms. Vaughn had a full and fair chance to litigate.
  • But the record did not establish why she did not appeal, or whether she understood that:
    • § 2118(j) describes arbitration as non‑waiver of rights; and
    • The ICA decision would not (or would) be given collateral estoppel effect.
  • Indeed, Ms. Vaughn was confused and believed the arbitration had in fact been appealed.

The Court stresses that at the summary judgment stage, all reasonable inferences must be drawn in favor of the non‑moving party. Given the truncated, informal nature of the ICA proceeding and Ms. Vaughn’s confusion about appeal, the Court could not find as a matter of law that she had a full and fair opportunity to litigate.

Thus, Allstate failed the fourth collateral‑estoppel element as well.

B. Res Judicata: Different Causes of Action, Different Forum Authority

Although the Superior Court did not reach res judicata, the Supreme Court analyzes and rejects it.

1. Different Causes of Action

The Court draws on Betts v. Townsends, which held that a temporary total disability claim and a later permanent partial disability claim, though arising from the same injury, were separate causes of action. By analogy:

• The ICA proceeding involved a PIP benefits claim.
• The Superior Court lawsuit involved a UM coverage claim.

They are different causes of action:

• PIP focuses on no‑fault benefits up to a statutory limit.
• UM focuses on whether an uninsured driver is legally liable for damages to the insured.

Therefore, the “same cause of action” requirement for res judicata is not met.

2. UM Claim Could Not Have Been Brought in ICA

Res judicata also typically requires that the plaintiff could have raised the later claims in the original action. Here:

• Section 2118(j) establishes an arbitration procedure exclusive to PIP claims.
• Allstate’s policy explicitly states that its PIP arbitration provision “shall not apply” to UM disputes, which are governed by a separate UM arbitration/judicial process.

Thus, Ms. Vaughn could not have asserted UM coverage claims in the ICA forum at all. Claim preclusion cannot bar a cause of action that was legally unavailable in the earlier proceeding.

3. Absence of a Final Decree

For reasons overlapping with the collateral estoppel analysis, the ICA decision does not qualify as a “final decree” within the meaning of res judicata:

• The arbitration is expressly non‑binding and optional under § 2118(j).
• The policy does not provide that the ICA decision on PIP can be reduced to judgment or applied beyond PIP coverage.

Therefore, the fifth element of res judicata — a final decree — is also not satisfied.

C. Overall Holding

Having found that:

• The ICA decision was not a final adjudication on UM issues;
• Ms. Vaughn’s opportunity to litigate there was in any event uncertain and disputed;
• PIP and UM claims are distinct causes of action; and
• UM claims could not have been brought in the ICA forum as structured by statute and policy;

the Court concludes that neither collateral estoppel nor res judicata bars Ms. Vaughn’s UM claim. The Superior Court’s grant of summary judgment is therefore reversed.

VII. Impact and Implications

A. For Policyholders and Accident Victims

• Policyholders who lose a PIP arbitration before the ICA are not automatically foreclosed from pursuing UM benefits in court.
• Particularly in hit‑and‑run cases — where credibility findings may be central — this decision ensures that:
  • An informal, non‑binding arbitration with limited procedures cannot permanently determine the insured’s rights under different coverage parts.
• Insureds retain the ability to pursue full tort‑based recovery under UM coverage despite an unfavorable PIP arbitration award.

B. For Insurers

• Insurers cannot treat ICA decisions as dispositive of all future disputes arising from the same accident, especially for different coverages like UM or underinsured motorist (UIM) coverage.
• They may need to:
  • Reassess litigation strategies that rely heavily on PIP arbitration outcomes to defeat later coverage claims.
  • Consider whether to draft clearer, separate arbitration provisions for each coverage type if they want binding arbitration (subject to statutory limits).
• However, insurers retain the ability to use ICA findings as persuasive evidence (e.g., for impeachment or narrative purposes), even if not preclusive.

C. For the Structure and Use of ICA PIP Arbitration

• The decision underscores that ICA PIP arbitration is intended as a , not as a binding adjudication of all issues arising from a motor vehicle accident.
• Participants and counsel should understand that:
  • PIP arbitration does not waive future rights, including UM litigation.
  • Preclusion from ICA outcomes will be highly limited at best.
• This may encourage:
  • More widespread use of ICA arbitration by insureds (since it no longer appears “risky” from a preclusion standpoint), or
  • Conversely, less reliance by insurers on the ICA as a vehicle for creating de facto binding outcomes.

D. On Delaware Preclusion Doctrine More Broadly

• Vaughn reinforces that optional, non‑binding, specialized tribunals rarely produce decisions that satisfy the “final adjudication” and “full and fair opportunity” requirements of collateral estoppel and res judicata.
• Courts will scrutinize:
  • The statutory design of the prior forum;
  • The contractual framework (especially in insurance policies); and
  • The practical fairness and robustness of the procedures used.
• Failure to appeal a non‑binding arbitration is not, standing alone, sufficient proof that the party had a full and fair opportunity to litigate for preclusion purposes.

E. Contract Drafting Lessons

• Insurers and policy drafters should note:
  • If they want a particular arbitral outcome to be binding and potentially preclusive, the policy should clearly:
    • Require mutual consent to arbitrate the specific type of claim.
    • Specify the arbitral rules and procedures (e.g., AAA).
    • State whether the award is binding and may be entered as a judgment.
  • Where separate coverages (PIP vs. UM) have separate arbitration or litigation pathways, courts will respect those separations and will not lightly allow decisions from one to spill over into another.

VIII. Complex Concepts Simplified

Some of the legal terms and doctrines in the opinion can be summarized in more accessible language:

• PIP (Personal Injury Protection):
  • No‑fault insurance benefits that pay for medical expenses and certain other losses after an auto accident, regardless of who was at fault.
• UM (Uninsured Motorist) Coverage:
• ICA (Insurance Commissioner Arbitration):
  • A state‑administered arbitration process under 21 Del. C. § 2118(j) used primarily to resolve PIP disputes quickly and informally.
• Collateral Estoppel (Issue Preclusion):
  • Once a specific factual issue (e.g., “Did an accident occur?”) has been fairly and finally decided in a prior case, the same parties cannot relitigate that issue in a later case.
  • Requires: same issue, final decision, same party, and a full and fair chance to argue the issue previously.
• Res Judicata (Claim Preclusion):
  • If a party has already litigated (or could have litigated) a certain claim in a previous case, and lost, they cannot bring that same claim again later.
  • Requires, among other things, that the earlier and later cases involve the same cause of action and a final judgment.
• Final Adjudication / Final Judgment:
  • A decision that fully resolves the rights and liabilities of the parties on the issues or claims at stake, with no significant procedural steps remaining in that tribunal.
  • For preclusion, the prior decision must be sufficiently final and authoritative.
• Full and Fair Opportunity to Litigate:
  • The party must have had a meaningful chance to present evidence, cross‑examine witnesses, and argue their case, with at least basic procedural fairness.
• Binding vs. Non‑Binding Arbitration:
  • Binding: The arbitrator’s decision is final and enforceable like a court judgment; typically precludes re‑litigation of the same issues or claims.
  • Non‑binding: The parties can still go to court afterward; the arbitrator’s decision is advisory or preliminary, not necessarily preclusive.
• AAA Rules (American Arbitration Association Rules):
  • A standardized set of procedures for arbitration, covering issues like appointment of arbitrators, hearings, evidence, and awards, designed to provide fairness and structure akin to a simplified court process.
• Summary Judgment:
  • A procedural tool that allows a court to decide a case (or an issue) without trial if there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law.
  • All reasonable inferences are drawn in favor of the non‑moving party.

IX. Evaluation and Observations

The Court’s opinion reflects a strong commitment to both:

• Honoring statutory design and contract language, and
• Preserving procedural fairness in the use of preclusion doctrines.

From a policy standpoint:

• The decision protects insureds from having their rights to more substantial coverage (UM) effectively extinguished by a brief, informal, and non‑binding PIP arbitration, especially one conducted over the phone with limited adversarial safeguards.
• It prevents insurers from leveraging the ICA — intended as a quick, optional dispute mechanism — into a de facto court of last resort for all factual questions arising from an accident.

One might argue that the decision could undermine efficiency by allowing issues like “Did an accident occur?” to be litigated multiple times. But the Court’s analysis rests on:

• The legislature’s explicit choice to label PIP arbitration as optional and non‑waiver of rights.
• The insurer’s own policy drafting, which carefully segregated PIP and UM arbitration regimes and made only the latter expressly binding under specific conditions.

In this sense, any concern about inefficiency is largely self‑inflicted by the statutory and contractual frameworks; the Court merely enforces them as written.

X. Conclusion

Vaughn v. Allstate establishes a clear and important rule for Delaware insurance and preclusion law:

An optional, non‑binding Insurance Commissioner Arbitration decision denying PIP benefits under 21 Del. C. § 2118(j), conducted pursuant to a PIP arbitration clause that is contractually distinct from the UM arbitration provision, does not have collateral estoppel or res judicata effect on a subsequent UM coverage lawsuit.

The Court’s reasoning turns on:

• The expressly non‑binding, optional character of § 2118(j) PIP arbitration.
• The policy’s separate, more formal UM arbitration provision, with explicit binding effect and AAA‑rules requirements.
• The limited procedures and ambiguities surrounding Ms. Vaughn’s ICA hearing, which undermined any claim that she had a full and fair opportunity to litigate.

In the broader legal context, the decision:

• Clarifies the limits of preclusion arising from specialized, non‑binding tribunals.
• Reinforces careful attention to statutory and contractual architecture when assessing the preclusive effect of arbitration awards.
• Protects insureds’ ability to pursue full contractual rights under UM coverage, independent of preliminary PIP arbitration outcomes.

Going forward, Vaughn is likely to be a leading case in Delaware on the interaction between ICA PIP arbitration, UM coverage, and the doctrines of collateral estoppel and res judicata.