The temp sender can go bad; its resistance can shift/drift, especially if the engine has been overheated, and when that happens the gauge reading will be wrong. Also, there is a difference in resistance range between up-to-'63 and '64-and-later temp senders, and the gauges are calibrated differently to account for it; mismatch will cause improper readings. What year and model car are you working on, and has it had an engine or instrument cluster swap ('63 and '64 Dart temp gauges only look identical!)?
If you are running the correct sender in good condition and the gauge is in proper repair and the instrument cluster voltage limiter isn't acting up (the fuel gauge doesn't also read high, does it?), then you can take a clue from a 1960 TSB that advised dealers to put a resistor in the temp sender wire to correct a complaint of "overheating" (temp gauge reading too high) that could not be verified as actual overheating and could not be cured with a new sender.
