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In this paper, we take a deep dive into microarchitectural security from a hardware designer's perspective by reviewing the existing approaches to detect hardware vulnerabilities during the design phase. We show that a protection gap currently exists in practice that leaves chip designs vulnerable to software-based attacks. In particular, existing verification approaches fail to detect specific classes of vulnerabilities, which we call HardFails: these bugs evade detection by current verification techniques while being exploitable from software. We demonstrate such vulnerabilities in real-world SoCs using RISC-V to showcase and analyze concrete instantiations of HardFails. Patching these hardware bugs may not always be possible and can potentially result in a product recall. We base our findings on two extensive case studies: the recent Hack@DAC 2018 hardware security competition, where 54 independent teams of researchers competed world-wide over a period of 12 weeks to catch inserted security bugs in SoC RTL designs, and an in-depth systematic evaluation of state-of-the-art verification approaches. Our findings indicate that even combinations of techniques will miss high-impact bugs due to the large number of modules with complex interdependencies and fundamental limitations of current detection approaches. We also craft a real-world software attack that exploits one of the RTL bugs from Hack@DAC that evaded detection and discuss novel approaches to mitigate the growing problem of cross-layer bugs at design time.