I believe it comes down to two factors:
1. As others have said, Sollozzo believed that having a police captain at his side was the best security money could buy.
2. He underestimated Michael. He believed Michael was a "civilian," and a "punk kid" to boot: he had let McCluskey break his jaw withouT filing charges or fighting back. He allowed himself to be humiliatingly searched by McCluskey in the car, acted humble, asked permission to go to the bathroom, allowed Sollozzo to feel his crotch for weapons.
To be fair to Sollozzo, he was cautious enough to have his driver pull that fast turnaround on the Washington Bridge to lose any potential tails. And in the novel, Sollozzo had a man in the restaurant, at another table, to whom he looked when Michael asked permission to go to the bathroom (the guy indicated with a look that no one was in the bathroom). But the last thing he expected was that Michael would pull out a gun and shoot both of them. Sollozzo made only one mistake--that one--and it was fatal.