The question is also who will be left holding the bag. If title searches over the past 10 years have turned up nothing problematic, then likely when the flipper sells, their buyer's title search won't turn up anything either.
And once their eventual buyer buys the house, it's their problem (not the flipper's) -- well, their title insurer's problem -- if a title dispute comes up later.
And given that the flipper's goal is to hold the house for a relatively short time and make a profit on the improvements, a thousand or few saved on the title insurance could actually be a material amount of that profit.
The flipper will be left holding the bag. The 10 years of prior searches won’t help you if the last owner snubbed a contractor and had a lien slapped on the house. Or a number of other scenarios.
The title company won’t issue the insurance if it finds issues like this. It will issue a list of items to clear before they will issue the insurance. It is generally up to the owner (eg the flipper) to cure the issues.
Insurance has negative expected value in return for risk pooling.
If something has a high level of importance in your finances or for other reasons, it makes sense to buy insurance. If you can handle the risk yourself (typically because the investment is not a terribly large amount of your total investments, and you do not think risk for this investment is correlated with risk to your other investments), then it doesn't make sense to buy insurance.
House flippers could be anything from very small one-person operations who would be wiped out if they had to clear a lien, to fairly large operations who can absorb the occasional risk into their costs of doing business.
That's fundamentally why title insurance doesn't pay out much. They exclude most defects that aren't discoverable and it's easy for everyone to find the defects that are. They are providing little actual protection hence why they pay out so little of premiums as claims.
And once their eventual buyer buys the house, it's their problem (not the flipper's) -- well, their title insurer's problem -- if a title dispute comes up later.
And given that the flipper's goal is to hold the house for a relatively short time and make a profit on the improvements, a thousand or few saved on the title insurance could actually be a material amount of that profit.