Fault passage indicators (FPIs) and fault locators (FLs) are employed in modern distribution networks in order to enhance the process of fault localization, thus resulting in reduction of interruption time and improving the reliability of power supply. In this paper, a novel probabilistic techno-economic optimization method is proposed for determining the number and positions of FPIs that lead to maximum reduction of interruptiontime and investment costs in medium voltage (MV) distribution networks with and without FLs. The proposed method is basedon a probabilistic non-sequential Monte Carlo simulation model of the real network, which is a proper compromise between complicated sequential simulation models and too simplified analytical models. The main goal of the method is to obtain maximum improvement of the network reliability indices while using the minimum number of FPIs. The method is tested on a combinedurban/rural MV distribution network in Bosnia and Herzegovina and results are thoroughly discussed.