To echo others' best practices:
1) Don't use your eReader to store your library. Use Calibre on a computer and back its library up often.
2) Don't rely on cloud storage alone for anything. If you do, you will be completely dependent on your internet connection, and on events beyond your control (like fire, bankruptcy, lawsuits, wars, etc.) that render the cloud servers temporarily or permanently inaccessible.
3) Don't keep your device's wireless connection "on" all the time. I know K users need this in order to synch between two devices, but it runs down your battery and makes it easier for Amazon to do things it shouldn't. I turn on my devices once or twice a month and monitor downloads etc. If I saw content start to disappear from my home screen, I'd turn the wireless off in a flash.
Finally, if this ever happened to me, I would seek redress through my credit card issuing bank, requesting a chargeback for the total value of all the books that disappeared. Even if Amazon is on the right side of the law with regards to deleting entire accounts when owners violate their terms of service, that does not give them the right to keep the money used to purchase the eBook licenses once the license has been revoked.