This reply is a little, late, but I did only start using the forum today, so apologies.
To answer Virtuo first of all ... it might be worth looking at Humyo. I use them and haven't had an issues as yet, although my backups are mainly general files (and not items such as SQL DB backups and so on). They have a free account option with 1GB storage space, but the backup process is manual. However, it is free and gives you the chance to try it out. Upgrading to premium (around £5 per month) comes with extra features, including auto backup. They also allow for reselling if you contact them.
As for the general incident discussed, I've a lot of experience from the hosting industry and have seen many debates between provider and customer ... most messy. Terms and Conditions are all fair and well, but whose fault it was is often subjective (hence the "messy"). My tip, and it is old skool: regardless of whether you have auto offsite backup or not, it's always worthwhile regularly backing up to your own USB stick or external harddrive. It's time consuming, of course, but does give you another option in such a scenario.
Brian
Brian Tait (taitbw) on Twitter