During 1997 Bulgaria experienced one of the deepest financial crises in CEE countries. The combination, with currency crisis, widespread bank failures, hyperinflation and government crisis had a very negative affect over the whole Bulgarian economy. Parallel with the introduction of a currency board, as part of measures for improvement of bank system soundness and public confidence has been to enact a law for deposit insurance. In this paper I discuss base principles for deposit insurance system design, and Bulgarian deposit insurance system is assessed accordingly.