The integration of Distributed Generators (DGs) into distribution systems (DSs) leads to more reliable and efficient power delivery for customers. However, the possibility of bi-directional power flow creates new technical problems for protection schemes. This poses a threat to conventional strategies because the relay settings have to be adjusted depending on the network topology and operational mode. As a solution, it is important to develop novel fault protection techniques to ensure reliable protection and avoid unnecessary tripping. In this regard, Total Harmonic Distortion (THD) can be used as a key parameter for evaluating the grid’s waveform quality during fault events. This paper presents a comparison between two DS protection strategies that employ THD levels, estimated amplitude voltages, and zero-sequence components as instantaneous indicators during the faults that function as a kind of fault sensor to detect, identify, and isolate faults. The first method uses a Multiple Second Order Generalized Integrator (MSOGI) to obtain the estimated variables, whereas the second method uses a single SOGI for the same purpose (SOGI-THD). Both methods rely on communication lines between protective devices (PDs) to facilitate coordinated protection. The effectiveness of these methods is assessed by using simulations in MATLAB/Simulink considering various factors such as different types of faults and DG penetrations, different fault resistances and fault locations in the proposed network. Moreover, the performance of these methods is compared with conventional overcurrent and differential protections. The results show that the SOGI-THD method is highly effective in detecting and isolating faults with a time interval of 6–8.5 ms using only three SOGIs while requiring only 447 processor cycles for execution. In comparison to other protection methods, the SOGI-THD method exhibits a faster response time and a lower computational burden. Furthermore, the SOGI-THD method is robust to harmonic distortion, as it considers pre-existing harmonic content before the fault and avoids interference with the fault detection process.