Early detection of incipient faults in AC drives is one of the most difficult challenges for condition monitoring, especially for faults related to insulation degradation of the windings. In low power motors, the insulation degradations are principally due to the steep voltage variations caused by the voltage source converters (VSCs) that drive the machines. In the last years, the possibility to employ coaxial cables in the stator windings has been explored in order to enhance the capacity of the motors to withstand the great values of dv/dt that are achieved by the no-Si based power devices. In this paper a new method to detect the presence of incipient faults in PMSM with coaxial insulated winding is presented and compared with a previous solution. The different methods were extensively evaluated, by means simulations and experimental results, to determine their feasibility to be employed as on-line condition monitoring systems.