Why does anyone need to buy Owner's Title insurance for a home?

I know that banks require it before they will write a mortgage. This sale is a cash deal – no mortgage required. The house is in an older, 100 year old, stable neighborhood. A lawyer and title company have been hired to do a title search and check for liens. The previous owners did a title search and check for liens.

Why should anyone spend 1% of the purchase price to buy this insurance? (It seems a bit like a scam to me.) Are we saying there is a chance the lawyer and his support team are incompetent? Do they not warranty their work?
Did you buy title insurance? Have any of you ever collected anything from that insurance?