The rising demand for stable power supply in distribution systems has increased the importance of reliable supply. Thus, a networked distribution system (NDS) linked with individual lines is being adopted, gradually replacing the radial distribution system (RDS) currently applied to most distribution systems. Implementing the NDS can lead to various improvements in factors such as line utilization rate, acceptance rates of distributed power, and terminal voltages, while mitigating line losses. However, compared with the RDS, the NDS can experience bidirectional fault currents owing to its interconnected lines, thereby hindering protection coordination, which must be addressed before the NDS can be implemented in real-world power systems. Due to the characteristics of NDS, the reverse fault current is relatively small. However, this phenomenon becomes more severe when the high impedance fault (HIF) occurs. In this paper, the malfunction of protective devices during the HIF is directly verified and analyzed in the NDS. As a result, when the HIF occurs, the issue of the reverse protective device malfunctioning worsens because of a reduction in fault current and a failure in direction detection. To solve this issue, this work proposes a communication-based protection algorithm. Through the comparative verification of the proposed algorithm and the conventional protection method, protection coordination can be secured in the case of an HIF without new devices. It must be highlighted that the proposed method does not affect the settings of the protective device and provides a cost-effective and efficient solution since this algorithm is added independently to the existing relay.