Odd that she's discounting how erotic transference occurs with both genders and I wonder whether she also refuses to hug lesbian and bisexual clients in that case. I second that if a T says no, even though it can be very hard not to take it personally, it typically isn't personal at all!

Hopefully your therapist will be open to hugs- they are nurturing among all genders and if arousal occurs it's nothing to freak out about- just another feeling that will pass like all the others and can be worked through if necessary.