Covered us up in red outer clothing! (7)
I believe the answer is:
insured
'covered' is the definition.
(covered by insurance)
'in red outer clothing' is the wordplay.
'outer' becomes 'su' (I am not sure about this - if you are sure you should give a lot more credence to this answer).
'clothing' is an insertion indicator.
'in'+'red'='inred'
'inred' placed around 'su' is 'INSURED'.
'us up' acts as a link.
This may not be right. Some or all of it may belong to another bit of the clue.
Can you help me to learn more?
(Other definitions for insured that I've seen before include "Covered for burglary?" , "Covered against accident" , "Financially protected" , "Covered for loss" , "Covered against mishaps" .)