A power steering system for an outdrive engine has a steering actuator, a motor for operating the steering actuator, a motor speed sensor for determining at least indirectly a speed of the motor, a steering rate sensor for determining a steering rate, and a controller communicating with the steering rate sensor and with the motor speed sensor. The controller is programmed for determining if a fault has occurred in the power steering system based on the steering rate and the motor speed, and taking at least one steering fault action in response to the fault having occurred. A method for controlling a power steering system includes determining if a fault has occurred based on the steering rate and the speed of the motor, and taking at least one steering fault action in response to the fault having occurred.