Fault location methods are crucial for reducing fault restoration time, and thus improving a network's system average interruption duration index (SAIDI) and customer outage cost. Resonant-earthed systems pose problems for traditional fault location methods, leading to poor accuracy and a need for additional complexity. In this context, methods that detect fault direction (fault-passage indicators, FPI) at multiple points in the network may show advantages over a central distance-estimation method using fault locators (FL) of poor accuracy. This paper includes a comparative study of these two major fault location methods, comparing the reliability benefit from a varied number of FPIs or a central method. The optimal placement of the fault locating devices is found by formulating a mixed-integer linear programming (MILP) optimization approach that minimizes both outage and investment costs and assesses SAIDI. This approach has been tested on an example distribution system. However, to justify the universality of the algorithm, the RBTS reliability test system has also been analysed. The comparison of location methods and placement method of FPIs are useful for reliability centred planning of resonant-earthed distribution systems where fault location is to be used. Results show that a small number of FPIs that give accurate identification of direction may give more cost effective increase in reliability than a distance estimate by FL with typical levels of inaccuracy.