German bishop to sin — policy for covering up (8)
I believe the answer is:
berliner
'german' is the definition.
(someone from Berlin)
'bishop to sin policy for covering up' is the wordplay.
'bishop' becomes 'B' (chess abbreviation).
'to sin' becomes 'err' (to sin is to err morally).
'policy' becomes 'line' (I've seen this before).
'for covering up' is an insertion indicator (inserted letters get covered up).
'err' placed around 'line' is 'erliner'.
'b'+'erliner'='BERLINER'
(Other definitions for berliner that I've seen before include "European citizen < in trio" , "Citizen of Germany's capital" , "'Ich bin ein . . . . . . . .' (JFK)" , "German capitalist" , "capital chap" .)