Power utilities worldwide commonly use the radial distribution system because of its advantages of being simple in structure and having relatively inexpensive installation costs. It has a disadvantage in that its power supply reliability is low because the load side of the fault section will suffer from an outage in the event of a fault in the system. However, recently, with ICT (Information and Communication Technologies) development, system reliability is required to be high as the outage-susceptible loads increase. In addition, the increase in the connection of distributed resources such as renewable energy and electric vehicles is making it impossible to predict the power flow and reducing line utilization. Therefore, a loop power distribution system is proposed as a measure to solve this problem. Because all buses (nodes) in a loop distribution system have two or more power supply routes, they are more reliable than the radial system. It allows them to improve line utilization by connecting lines with different load peak times. However, in the case of a fault in the loop distribution system, the fault current is supplied from both directions, making it impossible to properly isolate the fault section with the protection method of the conventional distribution system. The permissive overreach transfer trip (POTT) method using communication to compensate for the limitations of conventional protection devices, and the other method using directional distance relay, is proposed. However, these methods operate by determining the direction of the fault current but have a disadvantage. It is difficult to detect a fault due to the effects of ground faults and distributed generation (DG) occurring in other lines. Therefore, in this paper, we propose a protection coordination algorithm that uses the negative-sequence component of voltage and current that occur when an unbalanced fault occurs, rather than the determination of the directionality and use of communication. To validate this, we configured a system using PSCAD/EMTDC (Manitoba Hydro International Ltd., Winnipeg, Manitoba, Canada), a system analysis program package and verified the results depending on the type of faults with the proposed algorithm.