Insulated gate bipolar transistors (IGBT) have evolved significantly and become exceedingly fast. Today, their typical switching speeds are of the order of 100ns. The resulting dv/dt is considerably large and when employed in a variable speed motor drive inverter, ringing over-voltages occur at the motor terminals even with cable as short as 1 meter in length. In any such power converter system, protection of IGBT in the event of a fault is an essential requirement. An effective way of protection is by detecting IGBT de-saturation, which occurs during device over-current or short-circuit, using sensed collector-emitter voltage (V _CE ). Several commercial isolated gate-driver ICs are available today in the market with integrated V _CE de-saturation protection feature. Such a protection scheme when employed in a modern IGBT based power converter and used for motor drive applications can lead to spurious trips. This paper investigates and reports the reasons for such spurious fault sensing by IGBT gate-drivers employed in two-level inverters. The circuit conditions are analyzed and it is shown that the IGBTs essentially act as capacitors while switching low currents. This behavior in combination with other factors such as fast device switching times, load power factor, and dead-time, is shown to cause spurious V _CE fault trips. Two simple and cost-effective circuit modifications are suggested which ensure that such spurious fault sensing is avoided in power converters.