diff --git a/crates/xy/tests/restart_policy.rs b/crates/xy/tests/restart_policy.rs
new file mode 100644
index 0000000..21ce924
--- /dev/null
+++ b/crates/xy/tests/restart_policy.rs
@@ -0,0 +1,22 @@
+mod common;
+use common::*;
+
+#[tokio::test]
+async fn restart_cap_marks_failed() {
+    let xy = xy_bin();
+    let bad = exit_failure_bin();
+    let mut h = Harness::new();
+    h.write_server("flaky", bad.to_str().unwrap(), 19_010, "always");
+    h.start_daemon(&xy).await;
+
+    let mut saw_failed = false;
+    for _ in 0..60 {
+        let (_c, out, _e) = h.run_cli(&xy, &["list"]).await;
+        if out.contains("flaky") && out.contains("failed") {
+            saw_failed = true;
+            break;
+        }
+        tokio::time::sleep(std::time::Duration::from_millis(100)).await;
+    }
+    assert!(saw_failed, "flaky never reached failed state");
+}