With the emergence of autonomous functions in road vehicles, there has been an increased use of Advanced Driver Assistance Systems comprising various sensors to perform automated tasks. Light Detection and Ranging (LiDAR) is one of the most important types of optical sensor that detects the positions of obstacles, representing them as clusters of points in 3-dimensional space. LiDAR performance degrades significantly when driving in rain as raindrops adhere to the outer surface of the sensor assembly. The performance degradation behaviors include missing points and reduced reflectivity of the points. It was found that the extent of degradations is highly dependent on the interface material properties, which subsequently affects the shapes of the adherent droplets, causing different perturbations to the optical rays. A fundamental investigation is performed on the protective polycarbonate cover of the LiDAR assembly coated with four classes of materials – hydrophilic, almost-hydrophobic, hydrophobic, and superhydrophobic. Water droplets are controllably dispensed onto the cover to quantify the signal alteration due to each droplet of various sizes and shapes. To further understand the effects of droplet motion on LiDAR signals, sliding droplet conditions are simulated using numerical analysis and validated with physical optical tests using a 905 nm laser source and receiver to mimic the LiDAR detection mechanism. Comprehensive explanations are presented on LiDAR performance degradation in rain from both material and optical perspectives. These can aid component selection and the development of signal enhancing strategies for integrating LiDARs in vehicle designs to minimize the impact of rain.