A priest protecting a bishop's state (7)
I believe the answer is:
alabama
'state' is the definition.
(Alabama is an example)
'a priest protecting a bishop's' is the wordplay.
'priest' becomes 'lama' (lama is a kind of priest**).
'protecting' is an insertion indicator.
'bishop' becomes 'b' (abbreviation used in chess).
'a'+'b'='ab'
'lama' placed around 'ab' is 'labama'.
'a'+'labama'='ALABAMA'
(Other definitions for alabama that I've seen before include "Birmingham area" , "Southern American state" , "Confederate state during the American Civil War" , "17th US state, joined 1819" , "Somewhere in US" .)