Sinking
Sinking is the permanent loss of a ship. This can only happen in one of seven situations: During a sinking blockade, a sinking flotilla, a sinking imperial outpost, an encounter with Atlantis, an encounter with the Cursed Isles, and encounter on the Haunted Seas or PvP with a ship from a warring flag. In these circumstances, the ship sinks if its damage meter becomes completely full. A ship only sinks if it is shot or rammed by another ship (hitting rocks will not sink a ship, nor will a ship sink immediately if it enters the battle with full damage).
Sinking causes the loss of the sunken ship, its charts, the contents of both the hold and the booty, any furniture on board and its contents. There is also a very slim chance that those onboard (except non-warring jobbers in a PvP battle) will get an injury. Those not receiving an injury will receive a fish for use in rumbles. In either case, the pirates must stay until they receive the message, "This ship has been sunk!"
All players aboard the ship are sent to the last island on which the ship that sank was located.
Sunken Treasure
Sunken treasure appears in flotilla combat, sinking blockades, and Atlantis encounters in the place of a sunken vessel/monster. A vessel will only leave sunken treasure if that ship belonged to a Brigand King, or in the case of player vessels, had PoE aboard. In addition, Sea monsters always leave behind treasure. When another vessel remains adjacent to, or on top of the sunken treasure for all four moves of a turn, all pirates aboard are able to haul treasure in order to bring aboard booty from the sunken vessel. The sunken vessel fades as treasure is hauled from it, and then disappears once all the treasure has been recovered.