i noticed my macbook charger was not charging and it was hot and i noticed a hole in the cord so I took it out from the wall. My applecare is no longer in effect but will apple still cover this as this is a fire hazard?
It probably depends on the age and how it has been treated. Unfortunately, these cables can fray due to wear and tear. My MacBook Pro power supply just died in exactly the same way but then again it was nearly 4 years old and had been around the world a few times so I consider it to be not unreasonable.
Try calling their support line, you'll have better luck than with a Genius at the store I think. Don't be surprised if you don't get a new one... 3 years+ is pushing it for a replacement adapter.