Every material in Three.js has an AlphaMap property that you can use to change the opacity of the mesh. So you could draw a black rectangle where the boat is to "cut out" that part of the water plane with an opacity of 0.

I presume your boat is going to be moving, so your texture would also need to move this black rectangle. To solve this, you could use an HTML <canvas> element to draw and move the black rectangle. Then you could use THREE.CanvasTexture to turn the <canvas> into a texture for your plane's alpha.

const drawingCanvas = document.getElementById( 'drawing-canvas' );
const canvasTexture = new THREE.CanvasTexture( drawingCanvas );

const waterMaterial = new THREE.MeshBasicMaterial({
    transparent: true,
    alphaMap: squareTexture
});

See this working demo for how to use a 2D canvas as a texture in your 3D scene. When you draw on the top-left square, you'll see it being applied to the cube. You could copy this approach, but instead of assigning it to material.map, you'd use it on material.alphaMap.

You could check for the position of the hull vertices of the ship each frame and, given enough points on the PlaneGeometry, you could displace all vertices of the surface inside the ship hull to the y coordinate of the nearest hull vertex. This could probably also be done by a custom shader, which is probably a more efficient solution. @Marquizzo's idea with the alpha channel is probably a better solution, too, since you don't really want to simulate the displacement of the water, as I assume, but simply get rid of the display of water inside the ship. In this case, I would place an orthographic camera above the ship, set the near and far clipping planes as close as possible to the plane, and use the alpha channel or rather CanvasTexture inside the alpha channel as rendertarget. This way, you'll get a real time alpha map that also reacts to rolling, pitching and heave of the ship.

Effect of floating is made with sin function, applied to y-coordinate. You can use the same principle to make gltf model(ship) move on any coordinate axis.

Example:

position.y = Math.sin(ship.userData.initFloating + t) * 0.15;