Thanks for the advice.
I'm well aware it's a situation that's unlikely to occur.
But we don't buy insurance just because something is likely to occur. We also buy insurance because we either can't or do not want to bear the full cost if it does occur.
A $150,000 loss would be 15% of our stock portfolio. That's the cost of three $50,000 rentals that would each return close to $5,000 a year - which is what we intend to do with the money after we sell the property we're intending to flip.
So it's a significant loss if it does happen. I figure it ought to cost no more than $200 given what I've paid for title insurance before. Cheap insurance against a significant loss to us.
Well by your logic, you had better find a policy to cover yourself from being struck by a meteor and being gang raped by Grizzly Bears. At some point, you have to assume that there is little logic attempting to insure yourself from your imaginary fears. Why not ask your local title company exactly how many times in your lifetime that a local homeowner lost their property since somebody magically appeared with a completely unrecorded, and totally legitimate claim, to title that trumps the totally legitimate, recorded, lawful one that sits in your local courthouse? BTW, since you claim to be so aware of how this is a nearly non-existent risk, I would assume that you are also well aware that a lot of the industry works on ridiculous profit margins? In many states, the seller of the insurance nets 80% of the retail value of the policy. My local, go to guy, actually does settlements, handled by a lawyer on his staff at "no charge" since they make a huge profit by selling title policies at the state mandated price. They can do this, since the title insurance company knows that chance of spending even a tiny fraction of the $100k that you are insured for, is a statistically insignificant cost of their business model. Title insurance is about insuring that due diligence is done before the sale, to insure that there is a clean record of an unencumbered property being transferred, it is NOT about preventing imaginary trolls from appearing out of the woodwork to steal your property.
I buy property from an speculative investor who has cycled through huge volumes of properties. He buys from every source imaginable, short sales, REOs, courthouse steps, etc.... and NEVER spends a dime on title insurance. He does exactly what any diligent title insurer does, he searched the records and determines that there are no issues. In a sense, he self-insures, since the risk is extremely low, the cost of insurance grossly inflated, and it all is dependent on the quality of the investigative work done at the courthouse. In other words, if you know how to determine that the title is clean, at the time you are taking possession, you have eliminated 99.999% of any potential future issues.
In a forum about making wise financial choices, you have gotten several solid responses, yet want to argue about why you can't waste money insuring for statistically insignificant risks......................strange.