SCHEDULE 14A

                                 (RULE 14A-101)

                            SCHEDULE 14A INFORMATION

           Proxy Statement Pursuant to Section 14(a) of the Securities
                      Exchange Act of 1934 (Amendment No. )

Filed by the registrant  [X]
Filed by a party other than the registrant  [ ]

Check the appropriate box:
[ ]  Preliminary proxy statement. 
[ ]  Confidential, for use of the Commission only (as permitted
       by Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.


                           UNICO AMERICAN CORPORATION
                 ----------------------------------------------
                (Name of Registrant as Specified in Its Charter)


    ----------------------------------------------------------------------
    Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
--------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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                           UNICO AMERICAN CORPORATION
                             23251 Mulholland Drive
                      Woodland Hills, California 91364-2732

                              ---------------------


                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                        To Be Held Thursday, May 26, 2005


Dear Shareholder:

You are cordially invited to attend the Annual Meeting of shareholders of Unico
American Corporation (the "Company") to be held at the Woodland Hills Hilton and
Towers at Warner Center, 6360 Canoga Avenue, Woodland Hills, California 91367,
at 2:00 p.m. local time, to consider and act upon the following matters:

       1. The election of seven (7) directors to hold office until the next
          annual meeting of shareholders and thereafter until their successors
          are elected and qualified; and

       2. The transaction of such other business as may properly be brought
          before the meeting.


The Board of Directors has fixed the close of business on April 8, 2005, as the
record date for the determination of shareholders who will be entitled to notice
of and to vote at the meeting. The voting rights of the shareholders are
described in the Proxy Statement.

IT IS IMPORTANT THAT ALL SHAREHOLDERS BE REPRESENTED AT THE ANNUAL MEETING.
SHAREHOLDERS WHO DO NOT PLAN TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
VOTE, DATE, AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE-PAID AND
ADDRESSED RETURN ENVELOPE. PROXIES ARE REVOCABLE AT ANY TIME, AND SHAREHOLDERS
WHO ARE PRESENT AT THE MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON IF
THEY SO DESIRE.

                                  By Order of the Board of Directors,

                                  /s/ Erwin Cheldin
                                  ------------------
                                  Erwin Cheldin
                                  Chairman of the Board, President, and
                                  Chief Executive Officer

                                  Woodland Hills, California
                                  April 15, 2005



                           UNICO AMERICAN CORPORATION
                           --------------------------

                                 PROXY STATEMENT
                                 ---------------

                         ANNUAL MEETING OF SHAREHOLDERS

                                  May 26, 2005


This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Unico American Corporation, a Nevada corporation
(the "Company"), for use at the Annual Meeting of Shareholders of the Company to
be held at the Woodland Hills Hilton and Towers at Warner Center, 6360 Canoga
Avenue, Woodland Hills, California 91367 on May 26, 2005, at 2:00 p.m. local
time. Accompanying this Proxy Statement is a proxy card, which you may use to
indicate your vote as to each of the proposals described in this Proxy
Statement.

All proxies that are properly completed, signed, and returned to the Company
prior to the Annual Meeting, and which have not been revoked, will be voted. A
shareholder may revoke his or her proxy at any time before it is voted either by
filing with the Secretary of the Company at its principal executive offices a
written notice of revocation or a duly executed proxy bearing a later date, or
by appearing in person at the Annual Meeting and expressing a desire to vote his
or her shares in person.

The close of business on April 8, 2005, has been fixed as the record date for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. As of the record date, the Company
had outstanding 5,496,315 shares of common stock, the only outstanding voting
securities of the Company. For each share held on the record date, a shareholder
is entitled to one vote on all matters to be considered at the Annual Meeting.
The Company's Articles of Incorporation do not provide for cumulative voting.
Directors are elected by a plurality of the votes cast and abstentions and
broker non-votes are counted for the purposes of determining the existence of a
quorum at the meeting, but not for purposes of determining the results of the
vote.

The Company will bear the cost of the Annual Meeting and the cost of soliciting
proxies, including the cost of preparing, assembling and mailing the proxy
material. In addition to solicitation by mail, officers and other employees of
the Company may solicit proxies by telephone, facsimile, or personal contact
without additional compensation.

The Company's principal executive offices are located at 23251 Mulholland Drive,
Woodland Hills, California 91364-2732. The approximate mailing date of this
Proxy Statement and the Company's proxy card is April 15, 2005.

                              ELECTION OF DIRECTORS
                              ---------------------
The Company's By-Laws provide for a range of three to eleven directors and allow
the Board of Directors to set the exact number of authorized directors within
that range. The current number of authorized directors established by the Board
of Directors is seven (7). Directors are elected at each Annual Meeting of
Shareholders to serve thereafter until their successors have been duly elected
and qualified. Each nominee is currently a director, having served in that
capacity since the date indicated in the following table. All nominees have
advised the Company that they are able and willing to serve as directors. If any
nominee refuses or is unable to serve (an event which is not anticipated), the
persons named in the accompanying proxy card will vote for another person
nominated by the Board of Directors. Unless otherwise directed in the
accompanying proxy card, the persons named therein will vote FOR the election of
the seven nominees listed in the following table.


                                       1


The following table provides certain information as of April 8, 2005, for each
person named for election as a director, which includes all executive officers
of the Company:
                                                                         First
                             Present Position with Company or           Elected
 Name                  Age   Principal Occupation and Prior History     Director
 ----                  ---   --------------------------------------     --------

 Erwin Cheldin          73   President and Chief Executive Officer        1969
                             since 1969.  Chairman of the Board 
                             since 1987.

 Cary L. Cheldin        48   Executive Vice President since 1991.         1983 
                             Vice President 1986 to 1991 and  
                             Secretary 1987 to 1991.

 Lester A. Aaron, CPA   59   Treasurer and Chief Financial Officer        1985 
                             since 1985.  Secretary 1991 to 1992.

 George C. Gilpatrick   60   Vice President, Management Information       1985
                             Systems, since 1981. Secretary since 1992.

 David A. Lewis, CPCU   83   Retired insurance executive with over 40     1989 
                             years' insurance experience.  The last
                             27 years were with the Transamerica Group
                             of insurance companies.

 Warren D. Orloff       70  Retired actuary with over 40 years'           2001
                            experience specializing in retirement plans.
                            From 1990 until retiring in 1997, he was an
                            independent actuarial consultant for pension 
                            administration firms. He is a Fellow of
                            Society of Actuaries, Fellow of Conference
                            of Consulting Actuaries, and member of
                            Academy of Actuaries.

 Donald B. Urfrig      63   Consulting engineer in the areas of project   2001
                            management and integrated product development
                            since 1996.  In addition, he is also a 
                            private investor and owner of commercial and
                            agricultural businesses for the past 33 years.
                            From 1963 to 1996 worked in the aerospace 
                            industry in both technical and management
                            positions.

Except for Cary Cheldin, who is the son of Erwin Cheldin, none of the executive
officers or directors of the Company are related to any other officer or
director of the Company. The executive officers of the Company are elected by
the Board of Directors and serve at the pleasure of the Board.

Messrs. Erwin Cheldin, Cary L. Cheldin, Lester A. Aaron and George C. Gilpatrick
who hold approximately 51.0% of the voting power of the Company have agreed to
vote the shares of common stock held by each of them so as to elect each of them
to the Board of Directors and to vote on all other matters as they may agree. As
a result of this Agreement, the Company is a "Controlled Company" as defined in
the National Association of Securities Dealers ("NASD") Marketplace Rule
4350(c)(5). A Controlled Company is exempt from the requirements of NASD
Marketplace Rule 4350(c) requiring that (i) the Company have a majority of
independent directors on the Board of Directors, (ii) the Compensation Committee
be composed solely of independent directors, (iii) the compensation of the
executive officers be determined by a majority of the independent directors or a
compensation committee comprised solely of independent directors and (iv)
director nominees be elected or recommended either by a majority of the
independent directors or a nominating committee comprised solely of independent
directors.

During the year ended December 31, 2004, the Company's Board of Directors held
one meeting. Non-employee directors met without any management directors or
employees present four times during the year ended December 31, 2004.
Non-employee directors receive $2,000 each quarter as compensation for the
committee meetings they attend and $1,000 for each board meeting they attend.
All incumbent directors attended 75% or more of the combined total meetings of
the Board of Directors and the committees on which they served.


                                       2


The Board of Directors has established an Audit Committee presently consisting
of David A. Lewis, Warren D. Orloff and Donald B. Urfrig. The Audit Committee of
the Board of Directors oversees the accounting and financial reporting processes
of the Company and audits of its financial statements. The Audit Committee which
has a written charter met four times during the year ended December 31, 2004,
and held one meeting subsequent to the year ended December 31, 2004, to discuss
accounting and financial statement matters related to the year ended December
31, 2004. Mr. Lewis, Mr. Orloff and Mr. Urfrig are independent as defined in the
NASD listing standards. The Board of Directors has determined that the Company
does not have an "Audit Committee Financial Expert", as defined by the SEC,
serving on the Audit Committee. The Board of Directors believes that the members
of the Audit Committee are able to read and understand financial statements of
the Company, are familiar with the Company and its business, and are capable of
fulfilling the duties and responsibilities of an Audit Committee without the
necessity of having an "Audit Committee Financial Expert" as a member.

The Board of Directors has also established a Compensation Committee presently
consisting of Messrs. Cary Cheldin, Aaron, and Orloff. This Committee considers
and recommends to the Board of Directors compensation for executive officers.
The Compensation Committee held one meeting during the year ended December 31,
2004.

The Company does not have a Nominating Committee of the Board of Directors. The
Board of Directors presently consists of only seven members and has not added a
new member since 2001. Since the executive officers control approximately 51% of
the voting power of the outstanding common stock of the Company and occupy four
of the seven seats on the Board of Directors, the Board of Directors believes
that it is appropriate not to have a Nominating Committee. If there were a new
nominee for Director to be considered, it is expected that all of the Directors
would participate in the process. The Board of Directors does not have a formal
policy with regard to the consideration of any director candidates recommended
by shareholders. The Board of Directors, however, would consider qualified
nominees recommended by shareholders. Shareholders who wish to recommend a
qualified nominee should submit complete information as to the identity and
qualifications of the person recommended to the Secretary of the Company at
23251 Mulholland Drive, Woodland Hills, California 91364-2732. Absent special
circumstances, the Board of Directors will continue to nominate qualified
incumbent Directors whom the Board of Directors believes will continue to make
important contributions to the Board of Directors. The Board generally requires
that nominees be persons of sound ethical character, be able to represent all
shareholders fairly, have no material conflicts of interest, have demonstrated
professional achievement, have meaningful experience and have a general
appreciation of the major business issues facing the Company. The Board of
Directors does not have a formal process for identifying and evaluating nominees
for Director.

Communications with the Board of Directors
------------------------------------------
The Company provides a process for shareholders to send communications to the
Board of Directors or any of the Directors. Shareholders may send written
communications to the Board of Directors or any Director, c/o Secretary, Unico
American Corporation, 23251 Mulholland Drive, Woodland Hills, California 91364.
All communications will be compiled by the Secretary of the Company and
submitted to the members of the Board of Directors or to the individual Director
to whom it was addressed on a periodic basis. The Company does not have a policy
with regard to Directors' attendance at the Annual Meeting of Shareholders. Four
of the Directors attended the 2003 Annual Meeting of Shareholders.

Code of Ethics
--------------
The Company has adopted a Code of Ethics that applies to its principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. A copy of the Code of
Ethics may be obtained, without charge, upon written request to the Secretary,
Unico American Corporation, 23251 Mulholland Drive, Woodland Hills, California
91364.


         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------
The following table sets forth, as of April 8 2005, the names and holdings of
all persons who are known by the Company to own beneficially more than 5% of its
outstanding common stock, its only class of outstanding voting securities, and
the beneficial ownership of such securities held by each Director, nominee for
Director, and all Executive Officers and Directors as a group. Unless otherwise
indicated, the Company believes that each of the persons and entities set forth
below has the sole power to vote and dispose of the shares listed opposite his
or its name as beneficially owned by him or it.


                                       3





                                        Amount Beneficially Owned
                                        -------------------------
                                                   (1)                     (1)
                                                 Options                 Percent
                                     Without    Currently                  Of
Name of Beneficial Owner             Options   Exercisable     Total      Class
------------------------             -------   -----------     -----      ----- 

Certain Beneficial Owners
-------------------------
Erwin Cheldin (2)                   2,339,850            0    2,339,850    42.6%
23251 Mulholland Drive
Woodland Hills, CA 91364

Schwartz Investment Counsel, Inc.,    535,145                   535,145     9.7%
and Schwartz Investment Trust,
on behalf of its series Funds,
Schwartz Value Fund, and Ave Maria
Catholic Values Fund (3)                                      

General Re Corporation (4)            289,552                   289,552     5.3%
695 East Main Street
Stamford, CT 06904

Dimensional Fund Advisors, Inc. (5)   373,143                   373,143     6.8%
1299 Ocean Avenue
Santa Monica, CA 90401

FMR Corp. (6)                         309,000                   309,000     5.6%
82 Devonshire Street
Boston, MA 02109

Executive Officers, Directors, and
Nominees for Director
---------------------
Erwin Cheldin (2)                   2,339,850            0    2,339,850    42.6%
Cary L. Cheldin (2)                   204,860            0      204,860     3.7%
Lester A. Aaron (2)                   150,567            0      150,567     2.7%
George C. Gilpatrick (2)              104,717            0      104,717     1.9%
David A. Lewis                          3,000            0        3,000     0.1%
Warren D. Orloff                            0            0            0     0.0%
Donald B. Urfrig                       25,000            0       25,000     0.5%

All executive officers & directors
as a group (7 persons)              2,827,994            0    2,827,994    51.5%


  (1)  Includes for each person or group, shares issuable upon exercise of
       presently exercisable options or options exercisable within 60 days held
       by such person or group.

  (2)  Messrs. Erwin Cheldin, Cary L. Cheldin, Lester A. Aaron and George C.
       Gilpatrick have agreed to vote all of the shares of common stock owned by
       them aggregating 2,799,994 shares or approximately 50.9% of the
       outstanding common stock so as to elect each of them to the Board of
       Directors and to vote on all other matters as they may agree. The
       agreement terminates upon the earlier of such time as the group owns less
       than 50% of the outstanding shares of the common stock of the Company or
       April 15, 2019.

  (3)  Per Schedule 13G dated February 22, 2005.

  (4)  Per Schedule 13G dated February 14, 2005. Of the 289,552 shares
       beneficially owned, General Re Corporation does not have sole voting
       power over the shares, has shared voting power over 289,552 shares, and
       has shared power to dispose or to direct the disposition of 289,552
       shares.

  (5)  Per Schedule 13G dated February 9, 2005.

  (6)  Per Schedule 13G dated February 14, 2000. Of the 309,000 shares
       beneficially owned, FRM Corp. does not have sole or shared voting power
       over the shares, and has sole power to dispose or to direct the
       disposition of 309,000 shares.


                                       4


                  EXECUTIVE COMPENSATION AND OTHER INFORMATION
                  -------------------------------------------- 

Summary of Executive Compensation
---------------------------------
The following table sets forth information for years ended December 31, 2004,
2003, and 2002 as to executive compensation paid to the chief executive officer
and the other executive officers of the Company.

                           SUMMARY COMPENSATION TABLE
                                                                  
Name and Principal Position          Year     Annual Compensation    
---------------------------          ----     -------------------     All Other
                                               Salary      Bonus    Compensation
                                                 ($)        ($)         ($)
                                                 ---        ---         ---
Erwin Cheldin                        2004      300,000         -       39,294
President, Chief Executive           2003      300,000         -       35,294
 Officer and Chairman of             2002      300,000         -       30,000
 the Board

Cary L. Cheldin                      2004      275,000    32,500       39,294
Executive Vice President             2003      275,000    25,000       35,294
                                     2002      275,000    25,000       30,000

Lester A. Aaron                      2004      184,500    50,000       39,294
Treasurer and Chief                  2003      180,000    45,000       35,294
 Financial Officer                   2002      180,000    40,000       30,000

George C. Gilpatrick                 2004      174,250    47,500       39,294
Vice President and                   2003      170,000    40,000       35,294
 Secretary                           2002      170,000    40,000       30,000

     (*) Represents amounts contributed or accrued to the person's account under
         the Company's Profit Sharing Plan and the Company's Money Purchase
         Plan, all of which are vested. During the year 2002, the amount
         contributed to each executive officer's account under the Profit
         Sharing Plan and Money Purchase Plan was $17,000 and $13,000,
         respectively. During the year 2003, the amount contributed to each
         executive officer's account under the Profit Sharing Plan and Money
         Purchase Plan was $20,000 and $15,294, respectively. During the year
         2004, the amount contributed to each executive officer's account under
         the Profit Sharing Plan and Money Purchase Plan was $24,000 and
         $15,294, respectively. The Company's Profit Sharing Plan and Money
         Purchase Plan both have a March 31 fiscal year end (see "Retirement
         Plans").

Option/SAR Grants in Last Fiscal Year
-------------------------------------
No stock options or stock appreciation rights were granted to any executive
officer during the year ended December 31, 2004.

Options/SAR Exercises in Last Fiscal Year and Unexercised Options/SAR at Fiscal
 Year End
-------------------------------------------------------------------------------
No stock options or stock appreciation rights were exercised by any executive
officer during the year ended December 31, 2004, and no options or stock
appreciation rights were held by any executive officer at December 31, 2004.

Omnibus Stock Plan
------------------
The Company's 1999 Omnibus Stock Plan (the "1999 Plan") that covers 500,000
shares of the Company's common stock (subject to adjustment in the case of stock
splits, reverse stock splits, stock dividends, etc.) was adopted by the Board of
Directors in March 1999 and approved by shareholders on June 4, 1999. The 1999
Plan is divided into a Stock Option Program under which eligible persons may be
granted options to purchase shares of common stock, a Stock Appreciation Program
under which eligible persons may be granted the right to receive a payment in
the form of cash, stock or a combination of the foregoing, and a Restricted
Stock Program under which eligible persons may be issued shares of common stock
directly either through an immediate purchase or as a bonus. The 1999 Plan and
each Program are administered by the Board of Directors or a committee
authorized by the Board and consisting of at least two directors each of whom is
not an officer or employee of the Company and meets the qualifications set forth
in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended.
Presently, the 1999 Plan is being administered by the Board of Directors.


                                       5


Employees, consultants, advisors and directors of the Company are eligible to
participate in the 1999 Plan. However, only employees are entitled to receive
"incentive stock options" (as provided in Section 422 of the Internal Revenue
Code of 1986, as amended) under the Stock Option Program. Under the Stock Option
Program, both incentive stock options and options which do not qualify as
incentive stock options may be granted. The term of an option may not exceed ten
years (or five years in the case of the grant of an incentive stock option to a
holder of more than ten percent (10%) of the outstanding common stock). The
exercise price per share of common stock under an option may not be less than
the fair market value of the common stock on the date of the option grant. In
the case of the grant of an incentive stock option to a holder of more than 10%
of the outstanding common stock, the exercise price may not be less than 110% of
the fair market value of the common stock on the date of the option grant. Under
the Stock Appreciation Program, stock appreciation rights may be granted
separately or in tandem with a stock option. Stock appreciation rights entitle
the holder thereof to receive upon exercise of such right without payment to the
Company an amount which is not greater than the fair market value of a share of
common stock on the date of exercise of the stock appreciation right over the
fair market value of a share of common stock on the date of grant of the stock
appreciation right. Under the Restricted Stock Program, the Company may issue
shares of its common stock directly to eligible persons for consideration
consisting of cash, notes or past services rendered by the recipient. The
purchase price of the shares may not be less than the fair market value of the
Company's common stock on the date of issue. If a recipient terminates his or
her employment or other arrangements with the Company before the shares are
fully vested, then the recipient is required to surrender to the Company for
cancellation all unvested shares and the Company must repay the recipient cash
or cash equivalent consideration paid by him or her for those unvested shares
and cancel the unpaid principal balance, if any, on any promissory notes
attributable to surrender the shares.

In the event of a "change of control event" as defined in the 1999 Plan, all
unvested options, stock appreciation rights and restricted stock issuances will
immediately become exercisable or vest, as the case may be. The 1999 Plan
administrator may override the acceleration of these rights either in the
agreement setting forth those rights or prior to the "change of control event."
A "change of control event" occurs if (a) more than twenty percent (20%) of the
Company's common stock or combined voting power is acquired by a person or
entity other than Mr. Erwin Cheldin, the Company or an employee benefit plan of
the Company, but not including any acquisition directly from the Company; (b) a
majority of the Company's Board of Directors ceases to consist of the present
directors or persons whose election or nomination was approved by a majority of
the then incumbent Board of Directors (excluding any director who assumes his or
her position as a result of an actual or threatened proxy contest); (c) the
Company is reorganized, merged or consolidated into another entity; or (d) the
shareholders approve the liquidation or dissolution of the Company or the sale
of all or substantially all of its assets; unless with respect to (c) or (d),
after the event more than eighty percent (80%) of the common stock or the
outstanding voting securities of the Company, the surviving company or the
company that purchases the Company's assets is still held by persons who were
formerly the shareholders of the Company, and no person or entity other than Mr.
Erwin Cheldin, the Company, any employee benefit plan of the Company or the
resulting company or a twenty percent (20%) shareholder prior to the transaction
holds more then twenty percent (20%) of such company's common stock or combined
voting power.

All outstanding options, stock appreciation rights and/or unvested stock
issuances under the 1999 Plan will terminate upon consummation of (a) a
dissolution of the Company or (b) in case no provision has been made for the
survival, substitution, exchange or other settlement of any outstanding option,
stock appreciation rights and/or unvested stock issuances, a merger or
consolidation of the Company with another corporation in which the shareholders
of the Company immediately prior to the merger will own less than a majority of
the outstanding voting securities of the surviving corporation after the merger,
or a sale of all or substantially all of the assets and business of the Company
to another corporation.


                                       6


                      EQUITY COMPENSATION PLAN INFORMATION
                      ------------------------------------

The following table shows the total number of outstanding options and shares
available for other future issuance of options under the Company's equity
compensation plans as of December 31, 2004.



                                                                                                      Number of securities
                                                                                                     remaining available for
                                         Number of securities to be    Weighted-average exercise      future issuance under
                                           issued upon exercise of       price of outstanding      equity compensation plans   
                                            outstanding options,        options, warrants and        (excluding securities    
Plan Category                               warrants, and rights               rights              reflected in column (a))
-------------                               --------------------               ------              ------------------------
                                                   (a)                           (b)                          (c)
                                                                                                   
Equity compensation plans 
approved by security holders:
  1999 Omnibus Stock Plan                        272,000                       $5.254                       225,500

Equity compensation plans not
approved by security holders:                          0                            0                             0
                                                 -------                        -----                       -------
    Total                                        272,000                       $5.254                       225,500
                                                 =======                        =====                       =======



Retirement Plans
----------------
                               Profit Sharing Plan
                               -------------------
During the fiscal year ended March 31, 1986, the Company adopted the Unico
American Corporation Profit Sharing Plan. Company employees who are at least 21
years of age and have been employed by the Company for at least two years are
participants in such Plan. Pursuant to the terms of such Plan, the Company
annually contributes for the account of each participant an amount equal to a
percentage of the participant's eligible compensation as determined by the Board
of Directors. Participants must be employed by the Company on the last day of
the plan year to be eligible for contribution. Participants are entitled to
receive distribution of benefits under the Plan upon retirement, termination of
employment, death or disability.

                               Money Purchase Plan
                               -------------------
During the year ended December 31, 1999, the Company adopted the Unico American
Corporation Money Purchase Plan. This plan covers the present executive officers
of the Company; namely Erwin Cheldin, Cary L. Cheldin, Lester A. Aaron, and
George C. Gilpatrick. Pursuant to the terms of such Plan, the Company annually
contributes for the account of each participant an amount equal to a percentage
of the participant's eligible compensation as determined by the Board of
Directors. However, amounts contributed to the Unico American Corporation Profit
Sharing Plan will be considered first in determining the actual amount available
under the Internal Revenue Service maximum contribution limits. Participants
must be employed by the Company on the last day of the plan year to be eligible
for contribution. Participants are entitled to receive distribution of benefits
under the Plan upon retirement, termination of employment, death or disability.

Compensation Committee Interlocks and Insider Participation in Compensation
 Decisions
---------------------------------------------------------------------------
The Compensation Committee consists of the following Company directors: Cary L.
Cheldin, Lester A. Aaron, and Warren D. Orloff. Cary Cheldin is the son of Erwin
Cheldin, the President, Chief Executive Officer and Chairman of the Board.
During the year ended December 31, 2004, Cary Cheldin was the Executive Vice
President of the Company and Mr. Aaron was Treasurer and Chief Financial Officer
of the Company.

Executive Compensation Committee Report
---------------------------------------
The Company's compensation package for executive officers primarily consists of
a base salary, an annual incentive bonus, long-term incentive or non-cash awards
in the form of stock options, and contributions under the Profit Sharing and
Money Purchase Plans. The executive compensation program is designed to retain
and reward individuals who are capable of leading the Company in achieving its
business objectives. The Compensation Committee submits its recommendation to
the entire Board of Directors. The philosophy of the Compensation Committee is
to maintain a competitive base salary for executive officers and to provide an
incentive program that rewards executive officers for achieving certain
financial results. Base compensation is determined on a calendar year basis and
other incentives are determined when deemed appropriate.


                                       7


When determining base compensation for the executive officers, the Committee
takes into account competitive pay levels in the industry with its emphasis on
the median of the survey data. The Committee recommends adjustments to base
compensation when it determines that an executive officer's base compensation is
not competitive.

When determining bonuses for the executive officers, the Committee first
evaluates, and gives primary weight to, the operational and financial
performance of the executive management team, including the chief executive
officer, as a group. After the team results are determined, individual
effectiveness in contributing to the achievement of those results is considered.
The financial results, which are reviewed by the Committee, include the
Company's net income, revenues and expenses.

The Committee's base compensation review determined that the base salary for the
chief executive officer, taking into account the Company contributions under the
Profit Sharing Plan and Money Purchase Plan, was within a competitive range of
others in the industry and recommended that the 2004 base salary for the chief
executive officer remain at $300,000.

The Committee's bonus review considered and evaluated the operating results for
the three years ended December 31, 2003, as well as the improvements in results
through the third quarter of 2004. Primarily due to the losses incurred by the
Company in 2001 and 2002, the committee determined that no bonus should be paid
to the chief executive officer for the year ended December 31, 2004. The
Committee also recommended that the total amount of the bonuses to be paid to
all other executive officers as a group for the year ended December 31, 2004, be
increased by an aggregate of $20,000 over the prior year.

Section 162(m) of the Internal Revenue Code, enacted as part of the Omnibus
Budget Reconciliation Act of 1993 (OBRA) limits to $1,000,000 the deductibility
for any year beginning after December 31, 1993, of compensation paid by a public
corporation to the chief executive officer and the next four most highly
compensated executive officers unless such compensation is performance based
within the meaning of Section 162(m) and the regulations thereunder. For the
year ended December 31, 2004, the Company does not contemplate that there will
be nondeductible compensation for the executive officers of the Company.

                                                      THE COMPENSATION COMMITTEE
                                                       OF THE BOARD OF DIRECTORS

                                                        /s/  Cary L. Cheldin
                                                        /s/  Lester A. Aaron
                                                        /s/  Warren D. Orloff


Report of the Audit Committee
-----------------------------
Neither the following report of the Audit Committee nor any other information
included in this Proxy Statement pursuant to Item 7(d)(3) of Schedule 14A
promulgated under the Securities Exchange Act of 1934 or pursuant to Item 306 of
Regulation S-K constitutes "soliciting material" and none of such information
should be deemed to be "filed" with the Securities and Exchange Commission or
incorporated by reference into any other filing of the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates such information by reference
in any of those filings.

Management is responsible for the Company's financial reporting process
including its system of internal control and for the preparation of consolidated
financial statements in accordance with accounting principles generally accepted
in the United States of America (GAAP). The Company's independent auditors are
responsible for auditing those financial statements. Our responsibility is to
monitor and oversee these processes. It is not our duty or our responsibility to
conduct auditing or accounting reviews or procedures. We are not employees of
the Company; and we may not be, and we may not represent ourselves to be or to
serve as, accountants or auditors by profession or experts in the fields of
accounting or auditing. Therefore, we have relied on management's representation
that the financial statements have been prepared with integrity and objectivity
and in conformity with GAAP and on the representations of the independent
auditors included in their report on the Company's financial statements. Our
oversight does not provide us with an independent basis to determine that
management has maintained appropriate accounting and financial reporting
principles or policies, or appropriate internal controls and procedures designed
to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, our considerations and discussions with management and
the independent auditors do not assure that the Company's financial statements
are presented in accordance with GAAP, that the audit of the Company's 


                                       8


financial statements has been carried out in accordance with auditing standards
generally accepted in the United States of America, or that the Company's 
independent accountants are in fact "independent."


The Audit Committee has reviewed and discussed the audited financial statements
of the Company for the fiscal year ended December 31, 2004, with the Company's
management.

The Audit Committee has discussed with KPMG LLP the matters required to be
discussed pursuant to Statement on Auditing Standards No. 61 (Codification of
Statements on Auditing Standards, AU ss.380). Additionally, the Audit Committee
has received from KPMG LLP the written disclosures and the letter required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). The Audit Committee also has discussed with KPMG LLP matters
relating to their independence.

Based on the review and discussions described above, the Audit Committee
recommended to the Board of Directors of the Company that the audited financial
statements of the Company be included in its Annual Report on Form 10-K for the
fiscal year ended December 31, 2004.

                                                 Members of the Audit Committee:

                                                      /s/  David L. Lewis
                                                      /s/  Warren D. Orloff
                                                      /s/  Donald B. Urfrig


Performance Graph
-----------------
The following graph compares the cumulative total shareholder return on the
Company's Common Stock with the cumulative total return of equity securities
traded on the National Association of Securities Dealers Automated Quotation
System (NASDAQ) and a peer group consisting of all NASDAQ property and casualty
companies. The comparison assumes $100.00 was invested on December 31, 1999, in
the Company's Common Stock and in each of the comparison groups, and assumes
reinvestment of dividends. It should be noted that this graph represents
historical stock price performance and is not necessarily indicative of any
future stock price performance.

                      12/31/99  12/31/00  12/31/01 12/31/02  12/31/03  12/31/04
                      --------  --------  -------- --------  --------  --------
Unico American Corp.   100.0      86.1      79.1      46.9      83.2     141.6
NASDAQ Market Index    100.0      60.3      47.8      33.1      49.4      53.8
Peer Group Index       100.0     130.2     132.9     136.2     162.3     203.6


                                       9


                              CERTAIN TRANSACTIONS
                              --------------------
The Company presently occupies a 46,000 square foot building located at 23251
Mulholland Drive, Woodland Hills, California, under a master lease expiring
March 31, 2007. The lease provides for an annual gross rental of $1,025,952.
Erwin Cheldin, the Company's president, chairman and principal shareholder, is
the owner of the building. On February 22, 1995, the Company signed an extension
to the lease with no increase in rent to March 31, 2007. The Company believes
that the terms of the lease at inception and at the time the lease extension was
signed were at least as favorable to the Company as could have been obtained
from unaffiliated third parties.

In 2003, Unico made capital contributions totaling $3,000,000 to its Crusader
subsidiary. The contributions were made to ensure that Crusader maintained its
A.M. Best Financial Size Category VI rating, which requires capital of a least
$25,000,000. The funding of Unico's capital contribution to Crusader was derived
from available cash from the Company's other operations and the proceeds of two
notes. On September 29, 2003, the Company borrowed $1,000,000 from Erwin
Cheldin, a director and the Company's principal shareholder, president and chief
executive officer, and $500,000 from The Cary and Danielle Cheldin Family Trust.
Cary L. Cheldin is a director and the Company's executive vice president. As of
December 31, 2004, the Company repaid the note from The Cary and Danielle
Cheldin Family Trust in full and repaid $500,000 of the Erwin Cheldin note. On
January 31, 2005, the Company repaid an additional $250,000 of the Erwin Cheldin
note. The note from Erwin Cheldin is unsecured and it is payable upon demand of
lender (on no less than fourteen days' notice) and, if no demand is made, then
it is payable in full on September 28, 2007. The note may be prepaid at any time
without penalty. The note bears an adjustable interest of 5.5% as of December
31, 2004. The interest is payable monthly and is adjustable every third month by
adding a margin of one percentage point to the prime rate.

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
             -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (SEC) initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors, and greater than 10% beneficial owners are
required by regulation of the SEC to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on
review of copies of such reports furnished to the Company and written
representations that no other reports were required during the year ended
December 31, 2004, all Section 16(a) filing requirements applicable to its
executive officers, directors, and greater than 10% beneficial owners were
complied with.

                             APPOINTMENT OF AUDITORS
                             -----------------------
KPMG LLP has served as the Company's independent auditors since 1996. The Audit
Committee has selected them to continue as the Company's auditors and to audit
the books and other records of the Company for the year ending December 31,
2005. A representative of KPMG LLP is expected to attend the Annual Meeting of
Shareholders. Such representative will have the opportunity to make a statement
and will be available to respond to appropriate questions.

Audit Fees
----------
The aggregate fees billed by KPMG LLP for professional services rendered for the
audit of the Company's financial statements for the fiscal year ended December
31, 2004, and for the reviews of the financial statements included in the
Company's quarterly reports on Forms 10-Q for the fiscal year ended December 31,
2004, were approximately $185,000. The aggregate fees billed by KPMG LLP for
professional services rendered for the audit of the Company's financial
statements for the fiscal year ended December 31, 2003, and for the reviews of
the financial statements included in the Company's quarterly reports on Forms
10-Q for the fiscal year ended December 31, 2003, were approximately $148,000.

Audit Related Fees
------------------
The aggregate fees billed by KPMG LLP for professional services related to the
audit of the Company's financial statements for the fiscal years ended December
31, 2004 and 2003, exclusive of the of the fees disclosed under the section
audit fees above were $12,000 and $52,700, respectively. Audit related services
in both years included fees for the audit of the Company's Profit Sharing Plan.
Audit related services in 2003 also included services with respect to Crusader's
actuarial certification (required to be filed with regulatory authorities) and
reports filed with the SEC.


                                       10


Tax Fees
--------
No fees were billed for tax compliance, consulting and planning services
rendered by KPMG LLP for the year ended December 31, 2004. The aggregate fees
billed for tax compliance, consulting and planning services rendered by KPMG LLP
for the year ended December 31, 2003 were approximately $22,700. These fees were
primarily for the preparation and review of the Company's income tax returns.

All Other Fees
--------------
Other than the fees for services described above, there were no additional fees
billed by KPMG LLP during the years ended December 31, 2004 and 2003

The policy of the Audit Committee is to pre-approve all audit and non-audit
services provided by KPMG, LLP.


                                  OTHER MATTERS
                                  -------------
The Board of Directors is not aware of any business to be presented at the
Annual Meeting except for the matters set forth in the Notice of Annual Meeting
and described in this Proxy Statement. Unless otherwise directed, all shares
represented by proxy holders will be voted in favor of the proposals described
in this Proxy Statement. If any other matters come before the Annual Meeting,
the proxy holders will vote on those matters using their best judgment.

                             SHAREHOLDERS' PROPOSALS
                             -----------------------
Shareholders desiring to exercise their right under the proxy rules of the
Securities and Exchange Commission to submit proposals for consideration by the
shareholders at the 2006 Annual Meeting are advised that their proposals must be
received by the Company no later than December 16, 2005, for inclusion in the
Company's Proxy Statement and form of proxy relating to that meeting. If a
shareholder intends to present a proposal at the 2006 Annual Meeting but does
not seek inclusion of that proposal in the Proxy Statement for that meeting, the
holders of proxies for that meeting will be entitled to exercise their
discretionary authority on that proposal if the Company does not have notice of
the proposal by March 1, 2006.

                          ANNUAL REPORT TO SHAREHOLDERS
                          -----------------------------
The Company's 2004 Annual Report on Form 10-K includes financial statements for
the year ended December 31, 2004, the year ended December 31, 2003, and the year
ended December 31, 2002, and is being mailed to the shareholders along with this
Proxy Statement. The Form 10-K is not to be considered a part of the soliciting
material.

                             By Order of the Board of Directors,

                             /s/ Erwin Cheldin  
                             -----------------
                             Erwin Cheldin
                             Chairman of the Board, President
                             and Chief Executive Officer

                             Woodland Hills, California
                             April 15, 2005


                                       11


               PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
                          OF UNICO AMERICAN CORPORATION

The undersigned hereby constitutes and appoints LESTER A. AARON and CARY L.
CHELDIN, and each of them, with full power of substitution, the proxies of the
undersigned to represent the undersigned and vote all shares of common stock of
UNICO AMERICAN CORPORATION (the "Company"), which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders to
be held at the Woodland Hills Hilton and Towers at Warner Center, 6360 Canoga
Avenue, Woodland Hills, California 91367, on May 26, 2005, at 2:00 p.m. local
time and at any adjournments thereof, with respect to the matters described in
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement,
receipt of which is hereby acknowledged, in the following manner.

1. ELECTION OF DIRECTORS  [ ] FOR all nominees listed   [ ] WITHHOLD AUTHORITY
                              (except as marked to the      to vote all nominees
                              contrary below)               listed below

     ERWIN CHELDIN, CARY L. CHELDIN, LESTER A. AARON, GEORGE C. GILPATRICK,
               DAVID A. LEWIS, WARREN D. ORLOFF, DONALD B. URFRIG

     INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
           STRIKE A LINE THROUGH THE NOMINEE'S NAME ON THE LIST ABOVE.

2. IN ACCORDANCE WITH THEIR BEST JUDGMENT, with respect to any other matters
   which may properly come before the meeting and any adjournment or 
   adjournments thereof.

                      Please sign and date on reverse side.



                                       


THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED AS
DIRECTED HEREIN. When this proxy is properly executed and returned, the shares
it represents will be voted at the Annual Meeting in accordance with the choices
specified herein. IF NO CHOICES ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES.


                        DATED:____________________________________________, 2005


                              __________________________________________________
                                                                     (Signature)

                              __________________________________________________
                                                     (Signature if jointly held)

                              Please date and sign exactly as your name or names
                              appear herein. If more than one owner, all should
                              sign. When signing as attorney, executor,
                              administrator, trustee or guardian, give your full
                              title as such. If the signatory is a corporation 
                              or partnership, sign the full corporate or
                              partnership name by its duly authorized officer or
                              partner.


                     PLEASE COMPLETE, SIGN, AND RETURN THIS
                   PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.