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The fault behavior of an inverter interfaced distributed generator (IIDG) is determined by its control, which is significantly different from a conventional generator. This paper examines in detail the key features of IIDG's fault behavior with respect to interference with distribution protection. As an example, the fault behavior of a commercially available photovoltaic converter is shown through a hardware-in-the-loop (HIL) simulation using real-time digital simulator (RTDS). A case study is then performed using the HIL setup to investigate the impact of IIDG on the recloser-fuse coordination in the fuse saving mode. The results illustrate that due to fault current limiting behavior of inverters, IIDG marginally impact primary and back-up protection in a distribution system. But with high penetration level, IIDGs may disturb the recloser-fuse coordination.