The characteristic-based finite-volume time-domain method is applied to analyze the scattering from conducting objects coated with lossy dielectric materials. Based on the characteristic-based finite-volume scheme, two numerical strategies are developed to model the electromagnetic propagation across different dielectric media. One introduces a connecting boundary to separate the total-field region from the scattered-field region. The other employs the scattered field formulation throughout the computational domain. These two strategies are verified by numerical experiments to be basically equivalent. A numerical procedure compatible with the finite-volume scheme is developed to guarantee the continuity of the tangential electric and magnetic fields at the dielectric interface. Rigorous boundary conditions for all the field components are formulated on the surface of the perfect electric conducting (PEC) objects. The numerical accuracy of the proposed technique has been validated by comparison with theoretical results.