The mode of failure and failure probability of a brittle coating on a compliant substrate subjected to a static load through a spherical indenter is investigated experimentally and theoretically. We extend our recent study (2003, J Mat Sci 38:1589) of surface crack initiation in a monolithic solid to the layered system, and account for the multi axial stress state of the indentation in the failure probability analysis. Two modes of failure, a Hertzian cone crack initiating from the contacting surface and a half-penny-shaped crack initiating from the interface, are investigated and the probability of failure initiation for both surfaces are theoretically predicted and compared with experimental data. The effect of interface debonding on failure phenomena is investigated. For a given load the failure probability for debonded specimens is significantly higher than that of well-bonded samples. For the debonded case the theoretical failure probability curve falls within the 90% confidence interval of the experimental data, while the experimental values for the completely bonded case show somewhat lower failure probabilities than that predicted. This may be attributed to the possible bridging effect by the adhesive on interfacial surface defects in the ceramic that is not accounted for in our model.