My kids group did exactly this around 6 or 8 months ago. They were on a ship traversing a large magical lake and through various circumstances they activated their Immovable Rod while inside one of the passenger compartments of the ship.

I ruled that the rod stayed in place and began to crack the walls of the compartment, but not any major superstructure of the ship. Basically any non-load-bearing wall would be broken. Anything load-bearing would deactivate the Rod.