Clear-headed law lord covering island group (5)
I believe the answer is:
lucid
'clear-headed' is the definition.
(I've seen this in another clue)
'law lord covering island group' is the wordplay.
'law lord' becomes 'lud' (term used in law as in m'lud, my lord).
'covering' means one lot of letters goes inside another.
'island group' becomes 'ci' (I've seen this in other clues).
'lud' placed around 'ci' is 'LUCID'.
(Other definitions for lucid that I've seen before include "Thinking clearly" , "Sensible" , "Clear-cut" , "Shining, clearly" , "Crystal clear" .)