I have attached a very simple design of how I would like to configure 2 MikroTiks.

The desire Is to have failover if a router fails.

I read that VRRP is probably what I'm looking for but that would only work in a complete failure such as power failure. However if simply the cable came loose between the R1 and the ISP then VRRP would not work.

Is VRRP still the best option with other protocols and failovers in addition in place or is there perhaps a better design for my desire?

You would need to setup interface tracking rules to propagating a link failure into a VRRP master change. That said it isn't necessary for that type of failure when correctly setup.

What should be done is a BGP (or other routing protocol) peer should be setup between R1 and and R2. This could be via a new link between the two routers or via the L2 connection provided by the switch. This way when the failure you describe happens R1 is still VRRP master but the traffic flows through R2 to get to R1.

I might try and verify I understand you correctly.

Does this mean that the Connection to this ISP is vrrp aswell and it would failover however the Routing protocol between the two will route the traffic from the "LAN" (Lets say) of R1 but then route through to the "WAN" of R2?

It depends on how your configured with the ISP. If they have you plugged into the same device on their side or a VRRP pair then you can use VRRP as well. Most of the time I have just seen ISPs desiring to do two different BGP sessions as your being connected to different POP locations. Both scenarios will give you the redundancy you desire.

VRRP interfaces are not tied together. If you want them to match (LAN -WAN in your case) you'll need to script it via changing the priorities. This is not typically needed unless you don't want traffic flowing across the peer link.