Gosh, gentleman is hugging a pirate! (7)
I believe the answer is:
corsair
'pirate' is the definition.
(corsair is a kind of pirate)
'gosh gentleman is hugging a' is the wordplay.
'gosh' becomes 'cor' (I've seen this before).
'gentleman' becomes 'sir' (I've seen this before).
'is hugging' is an insertion indicator.
'sir' enclosing 'a' is 'sair'.
'cor'+'sair'='CORSAIR'
(Other definitions for corsair that I've seen before include "Pirate from N. Africa" , "Barbary pirate - pirate ship" , "Privateer" , "Seafarer" , "20 across" .)