Ship: arrangement of sails etc crushed by one's sinking? (7)
I believe the answer is:
frigate
'ship' is the definition.
(frigate is a kind of ship)
'arrangement of sails etc crushed by one's sinking?' is the wordplay.
'arrangement of sails etc' becomes 'rig'.
'crushed by' means one lot of letters goes inside another.
'one's sinking?' becomes 'fate' (I am not sure about this - if you are sure you should give a lot more credence to this answer).
'rig' inserted inside 'fate' is 'FRIGATE'.
(Other definitions for frigate that I've seen before include "Warship; -- bird" , "Ship" , "Naval escort vessel" , "Light warship" , "Type of warship" .)