I'd say when someone establishes a song as a hit then someone else jumps on the bandwagon and would profit from recording or performing the well known song then that is a cover. (Woolworths used to copy hit parade numbers using unknown artists and sell the result cheaper) The scenario would be rare in folk.

I have heard in a folk club someone announce that he will play so and so's version of whatever song but most of us have more imagination. Also you might hear a song announced as a (example only) Kate Rusby song when it was just a song she had sung, not written.

It is fair though to credit the author of a song if known.