A matrix $A$ is a covariance matrix if and only if it is a symmetric positive semi-definite matrix (see here).
A symmetric matrix is positive definite if and only if all of its leading principal minors are strictly positive (see here).
A symmetric matrix is positive semi-definite if and only if all of its principal minors are nonnegative (see here).
I suppose you know what (leading) principal minors are. However, if $A$ is a $n\times n$ matrix, then (see here):
- a minor is a square submatrix $A_{IJ}$ where $I$ and $J$ are subsets of $\{1,2,\dots,n\}$
- a principal minor is the determinant of $A_{IJ}$, $I=J$;
- a leading principal minor is the determinant of $A_{IJ}$ when $I=J=\{1\}$, or $I=J=\{1,2\}$, or $I=J=\{1,2,3\}$, etc.
You need a symmetric matrix which is positive semi-definite, but not positive definite: at least one $|A_{1,\dots,k;1;\dots,k}|$, i.e. at least one leading principal minor, must be null.
If $A$ is a $2\times 2$ matrix, the easiest solution is $a_{11}=0$ (the first leading principal minor is null), i.e. if $X_1$ is a degenerate random variable, then:
$$\begin{vmatrix} 0 & 0 \\ 0 & a \end{vmatrix}=0$$
Another example is: $Z\sim N(0,1)$, $\mathbf{X}=(Z,-Z)$, because (see here):
$$\mathbf{\Sigma}=\begin{bmatrix} 1 & -1 \\ -1, & 1 \end{bmatrix},\quad |\mathbf{\Sigma}|=0$$
i.e. the first leading principal minor is strictly positive, but the second one is null.
In general, degenerate multivariate distributions have singular covariance matrices. See Does $(X,X)'$ follow a bivariate normal distribution?.