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Large deployments of Distributed Generators (DGs) have substantial impacts on the structure of existing networks. In order to tackle these issues, it has been proposed to divide the network into smaller manageable sets which can be more effectively and efficiently operated. This very concept is called the `Microgrid'. However, due to their unprecedented structure, these smaller grids experience very significant protection issues. Conventional fault current protection schemes cannot be used and should be modified due to the existence of generators at all levels of the distribution system. Furthermore, two distinct operating modes (grid connected and islanded modes) exist in microgrids causing the fault currents in a system to vary substantially. It is also a challenge to operate Inverter Interfaced DGs (IIDGs) and estimate their fault currents. Fault current limiters have thus been proposed for proper operation of DGs in a network. This paper presents a conceptual design of a microgrid protection system which makes use of current limiters in fault current estimation. It utilizes extensive communication to monitor the microgrid and update relay fault currents according to the variations in the system. The proposed system is designed so that it can respond to dynamic changes in the system such as the connection/disconnection of DGs.