The normal way to test such a switch is to connect an ohmmeter between the pins while the sensor sits in a pot of water. Bring the water to a boil and see what happens. Add a little salt to the water to raise the boiling point a tad.

If the switch contacts close in this test, then either your dash gauge is inaccurate, or the coolant is not PROPERLY flowing past the sensor.

Steve

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'91 MB 190E 2.3
'08 RAV4 Ltd 3.5
'83 Lazy Daze m'home 5.7