One covered in rubbish -- that's a laugh (4)
I believe the answer is:
riot
'that's a laugh' is the definition.
(riot is a kind of laugh)
'one covered in rubbish' is the wordplay.
'one' becomes 'i' (Roman numeral).
'covered in' indicates putting letters inside.
'rubbish' becomes 'rot' (I've seen this before).
'i' going within 'rot' is 'RIOT'.
(Other definitions for riot that I've seen before include "Public disorder" , "loose living" , "Uproar" , "Debauchery" , "Wild disturbance by crowd of people" .)