That’s absurd. But the absurdity is happening on many levels, so let me break it down for you.
First, you had insured your flight from Baltimore to Orlando. That’s not a bad idea for an August flight, because hurricanes do happen in Florida. But you have to read the fine print on your insurance policy. In order to make a successful claim, your flight must be canceled by the airline. (By the way, if it is canceled, the airline will offer you a refund, anyway — but there are still other benefits from travel insurance, like trip-interruption coverage.)
Anyway, you canceled your flight proactively, and someone from Allianz should have told you that when you called. No one should have led you to believe you could have canceled your flight before the airline did.
Re-using your ticket should have been relatively easy, and if Hotwire couldn’t help you, then your airline should have. In reviewing your case, I note that a great deal of your communication was done by phone, which is unfortunate. Doing this by phone means you don’t have the benefit of a written record, so it’s hard to prove anything.
I checked with Hotwire. As it turns out, it had several detailed files on your case.
“As we worked through a potential rebooking, there were several discussions and messages exchanged back and forth between Velta and Hotwire in the weeks leading up to that one-year deadline,” a representative told me. “During that time, several work flows were created on our side due to the multiple contacts.”
In trying to sort through those files, Hotwire inadvertently closed your case and allowed your ticket credit to expire. It apologized for doing so and issued you a full refund for your ticket.