This paper deals with improving reliability and continuity of service in smart grids by ensuring the development of an efficient and precise approach for detecting and locating faults. Such faults can be categorized into short circuit faults, cable faults, and high impedance faults, resulting in high levels of damages and losses for both distributors and consumers. This detection and location methodology adopts an impedance-based approach that has been modeled and simulated in MATLAB Simulink software. For conducting simulation, it combines real-life micro-grid elements, including renewable energy units like solar panels and wind-turbine generators, diesel power, energy storage systems, and transformer units with domestic and industrial loads. Fault points are randomly selected for creating real-life scenarios. This methodology adopts real-life voltage and current readings from the grid for precise impedance calculation and locating points where high values are recorded. Simulation outputs validate its feasibility and effectiveness. Results indicated an accuracy level of 98% for short circuit faults, 95% for cable faults, and nearly 75% for high impedance faults. Moreover, the line location error showed a consistent average value not exceeding 8% of line length. These results clearly support that this impedance-based technique is very viable and can be effectively used for improved reliability and service continuity in smart grids with reduced losses and efficient integration of renewable energy sources.