What is a Umbilical Hernia?
If the umbilical ring does not completely close in the weeks after birth a little fatty tissue can become trapped on the outside of the abdomen.  If the muscle eventually closes as the puppy gets older the fat will remain and it resembles an "outie bellie button" like people can get. These are harmless and will not effect the health of the puppy.  Some families still like to get them fixed for cosmetic purposes. If the umbilical ring remains open it may need to be surgically fixed.  The size of the opening is what determines if this needs to be done.  Smaller hernias 1-2 cm or less will sometimes close on their own by the time puppy is 3-6 months old.  Anything larger than this will most likely not close.  In either case, about 99% of the time they are completely harmless and cosmetic only. I have a couple dogs that have had one their entire life and it has not caused them any harm.  I forget they even have one until I rub their belly.  If we have a puppy with a hernia my vet considers a risk to their health (larger with possibility of organ protrusion) we will have these fixed asap before they leave our care. 
There are have been lots of studies to determine if umbilical hernias are hereditary.  Some say yes, others no, and some divide hernias into categories and go from there.  Bottom line is no one knows yet and compared to the other more severe health issues puppies can get (especially Cavaliers) this is a very small problem. Some breeds do tend to have umbilical hernias more often than others.  King Charles Cavaliers are one of those breeds that do see it more often. 
Fixing them is a personally choice you need to make along with your vet.  Some Veterinarians and puppy families opt to never think a thing about them, while others opt to fix them while puppy is being spayed or neutered. Some big advantages to this are:
- puppy only has to be put to sleep once 
-Puppy is older and able to handle the anesthesia better and recover quicker
-The medical charges will also be a lot less. 
My vet charges less than $80 to have a hernia fixed if done at time of spay/neuter.  If done as a stand alone surgery it is 3 times that much.

I have attached more information about hernias from the VCA Animal hospital as well. 

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What is an umbilical hernia?

An umbilical hernia is a protrusion (outward bulging) of the abdominal lining, abdominal fat, or a portion of abdominal organ(s) through the area around the umbilicus (also called the navel or belly button). The umbilicus in dogs and cats is located on their underside just below the ribcage.

 

What causes an umbilical hernia?

Before birth, the umbilical blood vessels pass through the umbilical ring (an opening in the abdominal muscles) to provide nourishment to the developing fetus. An umbilical hernia is caused by the incomplete closure of the umbilical ring after birth. The hernia generally appears as a soft swelling beneath the skin and it often protrudes when the puppy is standing, barking, crying, or straining. Some hernias are reducible, meaning that the protrusion can be pushed back into the abdomen while others are non-reducible indicating at least partial obstruction or adhesion of the herniated contents to the opening.

"Some hernias are reducible, meaning that the protrusion can be pushed back into the abdomen."

An umbilical hernia can vary in size from less than a ¼” (1cm) to more than 1” (2.5cm) in diameter. Small (less than ¼“ or 1cm) hernias may close spontaneously (without treatment) by age 3 to 4 months. Umbilical hernias that do not close may require surgery, especially if a portion of an intestinal organ protrudes through it. Umbilical hernias are usually painless. The exact incidence and cause are unknown. Certain family lines have a higher incidence of umbilical hernias suggesting at least a partial genetic predisposition to the condition.

 

Is an umbilical hernia dangerous?

Most umbilical hernias pose no health threats.

"In rare cases, a portion of the intestines or other tissues can be trapped and become strangulated."

(blood flow is cut off to the tissue, causing its death). This is an emergency requiring immediate surgery.

 

How is an umbilical hernia treated?

If the hernia has not closed by the time of spaying or neutering, surgical repair of the hernia is recommended. The surgery can be performed at the time of spaying and neutering. The fibrous or scar tissues that have formed around the hernia are dissected out or removed, and the defect is closed with sutures.

 

What is the prognosis for an umbilical hernia?

The prognosis is excellent following surgical correction. Few puppies experience recurrence of the hernia and few complications are reported with the procedure.

Contributors: Tammy Hunter, DVM; Ernest Ward, DVM

Citation :

VCA Hopsital 

https://vcahospitals.com/know-your-pet/hernia-umbilical-in-dogs