This paper investigates and quantifies the consequences of ignoring power converter failures in the system-level design of microgrids. To achieve this goal, the process of converter-level reliability modeling, calculating the availability, and finally obtaining the system-level reliability indices are explained. A model-based and mission profile-based system-level design methodology has been used, which considers both reliability and cost. Further, the methodology has been implemented in a case study, once considering and once ignoring the power electronic failures. Accordingly, it has been shown that ignoring the converter failures can lead to an unreliable system-level design and jeopardizes its cost-effectiveness in the long run.