Firstly to attach the decals you use “Spawn Decal Attached”. Not sure whether the location type should’ve been kept as keep relative offset (i guess it should) or set to snap to target.
Assuming it’s a multi material character you just need to define a physical surface for each material.
Then on hit you just use “Switch on EpPhysicaSurface”
Something very similar to this:
Bear in mind that i’ve done it in 30 seconds blindly based on my knowledge and assumptions so it may work straight away or require some tweaks.
As a post-thought i think the location type should’ve been kept as default “keep relative offset” as snap to target without specified bone/socket will just attach each decal to object root (if any).
You define physical surfaces in project settings.