In short: a deposit guarantee is protection under which, if a bank fails, a special fund pays each depositor up to €100,000 from all their accounts at that bank, without any application.
Simply put: Banks pay into a common fund that repays people, up to the limit, if a bank loses its licence. All your accounts at one bank are added together. Investment products are not covered.
Example: A savings account of €90,000 and a current account of €20,000 at one bank — €110,000 in total. The fund pays €100,000, and for €10,000 you become a creditor of the bank.
Watch out: the guarantee is "one person — one bank", not "one account".
The EU rule: €100,000 per depositor per credit institution, with payout within seven working days (Directive 2014/49/EU, Articles 6–8).
Example: Bulgaria — the Bulgarian Deposit Insurance Fund (BDIF) covers up to €100,000 per person per bank (Bank Deposit Guarantee Act, Article 9(1)), temporarily up to €125,000 for some deposits, such as from selling a home (Article 10(1)). Payout begins within 7 working days (Article 20(5)). The bank gives an information sheet before the contract and at least once a year (Credit Institutions Act, Article 57(3)).
Check in your country — the name of your national scheme and its rules on temporary high balances.
Source: Directive 2014/49/EU, Articles 6–8: http://data.europa.eu/eli/dir/2014/49/oj · BDIF: https://dif.bg · Bank Deposit Guarantee Act (in Bulgarian): https://www.lex.bg/bg/laws/ldoc/2136592588