Service level agreement credit
A rebate a provider grants when it misses its uptime commitment, capped at a fraction of the subscription and therefore unrelated to the loss suffered.
A service credit is what the contract grants when a provider misses the uptime it promised. It takes the form of a rebate expressed as a percentage of that period's invoice, usually capped between ten and thirty percent, and it never converts into damages. The mechanism is a liquidated penalty, with nothing of cover about it. It sits alongside limitation of liability clauses that expressly exclude consequential loss, lost profit and reputational harm. Hence a structural gap, which is the whole point: a customer whose operations stop for a full day receives a credit worth a few thousand pounds against a loss counted in millions. Contingent business interruption cover exists to fill that gap, which is why an underwriter reads the contractual caps before pricing the cover, not after. Mistaking an uptime commitment for insurance is the most expensive error a buyer of managed services can make.
The faulty CrowdStrike update of July 19, 2024 disabled roughly 8.5 million Windows machines according to Microsoft. Delta Air Lines reported a loss of around $500 million, bearing no relation to the contractual rebates available under service level commitments.
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