In recent years, the networked distribution system (NDS), which is normally connected to the distribution line (DL), was actively studied as the topology of the future distribution system for reasons such as improving supply reliability, improving line utilization, and increasing the capacity of distribution generators (DGs). However, the NDS creates new issues in terms of protection coordination because of its bidirectional power flow and fault current flow. The issues associated with conventional protection schemes in the NDS include malfunction of protective devices due to bi-directional fault currents and failure of protection coordination due to communication failures between protective devices. When applying a conventional protection method in the NDS, the protection schemes become complicated, and there is a risk of protection coordination failure due to communication failure between protective devices. To solve this problem, this paper proposes an effective and innovative non-communication-based protection algorithm for protection coordination in the NDS. The proposed protection algorithm utilizes fault impedance characteristics, which allow not only determination of whether a fault occurred, but also the ability to identify the exact fault point. Therefore, the proposed method is expected to be sustainably utilized and contribute to developing protection schemes and devices in various system topologies and scenarios in the future. Additionally, this paper addresses the overall concept of hardware-in-the-loop simulation (HILS) and directly verifies the proposed protection algorithm using HILS. Therefore, this study establishes a sustainable foundation for future research on protection coordination using HILS.