OK, now I understand the travel insurance issue. I knew from your name that you are Indian, but I assumed you live in the US or the UK. I checked on Insuremytrip.com and they will insure your trip for medical coverage only, not trip,cancellation. Is there no travel insurance company in India that can offer such insurance for your trip? What do travelers from India do they visit Europe?
In any case, if you are looking for the most liberal cancellation and refund terms in Ortesei, you can use the filters on booking.come to filter for “free cancellation”. Most of the 34 properties that came up when I entered random dates in June for a 5-night stay said “free cancellation up to 61 days in advance” which seems to be the standard in the alpine regions (including places I have looked at in Switzerland). But a few of the holiday apartments were much more generous.
Are you willing to consider an self-catering apartment instead of a hotel? You can still dine at restaurants if you like, but we actually prefer the option of cooking for ourselves to save money and get what we like to eat.
Among the apartment on offer are two one-bedroom apartments in a building named Chesa Valeria (Cësa Valeria in the local Ladin language). One apartment is named Sonia and the other is named Monika, but both are $768 for the 5 nights I chose ( June 19-24). The building is very close to the base of the Seceda lift. Pay nothing to book on booking.com until 2 June and cancel for free (no penalty) until 4 June (2 weeks before arrival). You should be pretty confident by then that you will actually be able to travel.
There are no reviews on booking.com because it is a new listing there, from August 2022. But the Cësa Valeria holiday apartment building has its own website, and if you can find Google reviews of that—-I saw 5 Five-star reviews from Pre-covid stays.
https://www.cesavaleria.it/en/
https://www.booking.com/hotel/it/cesa-valeria-app-sonia.en-gb.html?aid=356980&label=gog235jc-1FCAMocUIHb3J0aXNlaUgzWANotAKIAQGYAQm4AQfIAQ3YAQHoAQH4AQyIAgGoAgO4Av2-w5wGwAIB0gIkYzAyNTVkZWEtYmU0Yy00NmU4LTkxM2QtNGJkMWJhZWVhMjZl2AIG4AIB&sid=3e6494fa9bf820da9f93faa2b64aaa60&all_sr_blocks=894031002_359806902_2_0_0;checkin=2023-06-19;checkout=2023-06-24;dest_id=-123483;dest_type=city;dist=0;group_adults=2;group_children=0;hapos=22;highlighted_blocks=894031002_359806902_2_0_0;hpos=22;matching_block_id=894031002_359806902_2_0_0;nflt=fc%3D2;no_rooms=1;req_adults=2;req_children=0;room1=A%2CA;sb_price_type=total;sr_order=popularity;sr_pri_blocks=894031002_359806902_2_0_0__73171;srepoch=1670438936;srpvid=2bbf84465b2e00af;type=total;ucfs=1&#hotelTmpl
I saw a couple of other apartments with similar cancellation policies, but they were much more expensive or not well-located. But you should look through them yourself, and also check each hotel individually for a similar more liberal cancellation policy if you prefer that.
I hope you do not have to give up your plans of hiking in the Dolomites because of this issue. It is such a beautiful place, offering wonderful hiking; it is well worth the time and trouble to find a place to stay that works for your needs. I don’t think it would help to change to a different location—-Switzerland is even more expensive, and they definitely expect people to have trip insurance to cover their holidays there. Maybe Austria would be better, but I don’t know that country at all.