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Always grease it. Every couple of months I clean if off with a rag and re-grease it. Helps keep the rust off it. Use a plastic cover to make it safe for anyone else. Usually bash my own knee on it, and have found that my knee never goes anywhere near the plastic cover.
After feeling the heat generated in the cupelling during a long trip a few years back I now lube the towball with a bit of grease and cover it with a plastic cover when not in use, or remove the tongue altogether (Hayman Reese) .
Just a point from Saurians comment about adjusting the female (trailer) coupling so it is nice and tight.
A lot of people think this is an adjustment bolt to keep the trailer firmly connected to the car.
It isnt .. it has nothing to do with the trailer staying connected. It is an anti rattle bolt, that does exactly that - reduces rattles when adjusted correctly.
I havent ever greased a towball, and have never had any problems ... either has my father or my grandfather.