Cowardly suspect admits "stole on occasion" (7)
I believe the answer is:
gutless
'cowardly' is the definition.
(I've seen this before)
'suspect admits stole on occasion' is the wordplay.
'suspect' becomes 'guess'.
'admits' is an insertion indicator.
'on occasion' means one should take alternating letters.
The alternate letters of 'stole' are 'tl'.
'guess' placed around 'tl' is 'GUTLESS'.
(Other definitions for gutless that I've seen before include "Chicken-livered" , "Perhaps trim" , "Showing no evidence of bottle" , "Lacking any backbone" , "Lacking courage and determination" .)