On-line detection of rotor and load faults in permanent magnet synchronous motors (PMSM) based on spectrum analysis of current or vibration is not capable of identifying the root cause of the fault, since all faults produce identical fault signatures. The sensitivity of fault detection also depends on the motor and controller design making fault detection unreliable. In addition, operation under variable frequency and load limits the effectiveness of spectrum analysis based methods. In this paper, airgap flux monitoring is investigated as an alternative for providing reliable identification of rotor and load faults in PMSMs. Based on the analysis of airgap flux under partial and uniform demagnetization, dynamic eccentricity and load unbalance, an airgap search coil voltage based method for detection and classification of the faults is proposed. The claims made in the paper are verified through experimental testing on an IPMSM under emulated fault conditions along with a comparison to vibration and current spectra-based detection. It is shown that the proposed method provides reliable on-line identification of the faults for cases where conventional spectrum analysis based methods fail.